We’ve all deposited money with a bank, but have you ever stopped to think what the bank does with those funds?
When you deposit money with your bank, you’re essentially lending that money to them, which is how you earn interest on the balance on your savings or term deposit. Banks then use those funds in various ways, including:
• to fund the loans they offer other customers
• to lend to other banks when they need to boost their funds
• to lend to businesses.