2 Polnts

How can banks afford to pay interest on their customers' savings account

deposits?

A. They charge high fees to their checking account customers and

transfer that money to their savings account customers.

O

B. They loan out the money in their customers' accounts and charge

a higher interest rate on the loans.

C. They take overnight loans from the Federal Reserve Bank and

speculate on the currency exchange market.

O

D. They invest their customers' deposits in government-insured

bonds and low-risk stocks.

Question

History

Cantrell

5 March, 22:25

2 Polnts

How can banks afford to pay interest on their customers' savings account

deposits?

A. They charge high fees to their checking account customers and

transfer that money to their savings account customers.

O

B. They loan out the money in their customers' accounts and charge

a higher interest rate on the loans.

C. They take overnight loans from the Federal Reserve Bank and

speculate on the currency exchange market.

O

D. They invest their customers' deposits in government-insured

bonds and low-risk stocks.

+2

Answers (1)

Know the Answer?

Lexi Stein · Answer 1

B) They loan out the money in their customers' accounts and charge a higher interest rate on the loans.

Explanation:

The reason you recieve money for putting money in a checking or savings account is because the bank needs money to loan to other customers. Because the customer recieving the loan pays the bank interest in return, the bank can afford to share some of the money gained in interest with customers to encourage them to keep money in the bank.