Why do banks offer incentives like interest on money you deposit into savings accounts?
A. They loan the money deposited back out to other customers
B. The money is not insured if not in a savings account
C. They keep money secured in a vault
A. They loan the money deposited back out to other customers
By offering incentives like interest on money deposited into savings accounts, banks are able to attract more customers to deposit their money in the bank. This allows the bank to then use that money to lend out to other customers at a higher interest rate, making a profit on the difference between the interest paid on savings accounts and the interest charged on loans. Incentives like interest also help to encourage people to save money rather than spend it, which can help the overall stability of the banking system.