Interest ChargedBanks charge interest in order to make money--banks are profit-making institutions. Interest charged comes with borrowing money. Since banks loan out money, they charge interest, too. In order to profit, banks loan out money and charge higher interest rates to the borrowers. These higher interest rates contrast with the interest rates the banks give to those who deposit their money into the institution.
|
Interest EarnedPeople earn interest from banks as a sort of "gift" from the bank they house their money in. Interest earned is for people to earn some money. Bankers pay these depositors interest to influence them to continue to deposit their money at that bank. The interest people earn is lower than the interest banks charge those who borrow money. This is because, as described in "Interest Charged", banks are profit-making institutions.
|