If a bank gives you 3% yearly interest in a GIC, then how much money are they making? Is it 4% a year, and they give you 3%? Or does the bank make something ridiculous, like 3% monthly interest off your savings?
Will we ever know?
Also, I was looking at the Canada government website, and they said charity donations are only tax deductible up to 75%, in America what is the percentage, is it 90-100%?
>>1321229
Sorry, I guess GIC is a Canadian savings account, where the money is locked into it for a year or more.
>>1321229
no they usually have a fixed fee for handling and a fee if you break up your deposit.
i imagine something like a state bond will be behind that investment.
>>1321229
>If a bank gives you 3% yearly interest in a GIC, then how much money are they making?
While banks do many things with your money, the traditional way they make money is my lending it to people and companies and charging them interest on the loans. Interest rates on loans vary wildly depending on the loan and the borrower.
The lowest interest rate you can ever expect to find on a loan is called the prime rate, which is currently around 3.5%. This is for an institutional loan with essentially ZERO risk, which is pretty rare. Most companies borrow at somewhere prime + 2 to prime + 6, so 5.5% to 9.5%.
Loans to individuals tend to be higher, with the exception of mortgages. Mortgages are generally near the prime rate because they are extremely low risk, statistically speaking. Personal loans(lines of credit, overdraft protection, etc.) are generally higher, going all the way up to credit cards, which can range from 12% to 18%.
Also, banks make fees on all loans, which add materially to their profit.
