{"id":327,"date":"2014-06-10T12:32:14","date_gmt":"2014-06-10T11:51:33","guid":{"rendered":"https:\/\/www.ecrowdinvest.com\/blog\/?p=327"},"modified":"2016-01-28T14:15:58","modified_gmt":"2016-01-28T14:15:58","slug":"why-banks-pay-interest","status":"publish","type":"post","link":"https:\/\/fotovoltaica.ecrowdinvest.com\/blog\/why-banks-pay-interest\/","title":{"rendered":"Why do banks pay me interest on my savings accounts?"},"content":{"rendered":"
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Why do banks pay interest on my savings?<\/h2>\n

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Ever wonder why a bank pays you interest on the money deposited in your savings account? After all, you didn\u2019t do anything for it. How can a bank afford to pay interest?<\/p>\n

Banks use the money deposited on savings accounts to lend to borrowers, who pay interest on their loans. After paying for various costs, the banks pay money on savings deposits to attract new savers and keep the ones they have. The difference between the money earned as interest on loans, any operating expenses, and the money paid as interest to savings accounts is profit to the banks.<\/p>\n

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An example<\/h2>\n

\"when<\/a><\/p>\n

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Assume you deposit 1,000\u20ac into a savings account that pays 1% interest. Your interest payment for the year is 10\u20ac. The banks now loan your 1,000\u20ac to a business at a 8% interest rate and will earn 80\u20ac in interest income. The difference of 70\u20ac is for the bank. Assuming the bank has 30\u20ac worth of expenses to pay for employees, property, insurance and other expenses, the banks profit from your money is 40\u20ac.<\/p>\n

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Invest with ECrowd!<\/a><\/div>\n

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Who decides the interest rate?<\/h2>\n

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The interest rates banks charge is mainly based on 3 factors:<\/p>\n