They loan your money to other people and charge interest to get the loan. So if you keep your money in a savings account, the bank gives you 0.01% interest but can turn around and give your money to many other people and charge let's say 5% interest or more to the ones receiving it.
They also charge fees like maintenance fees, annual fees, membership fees, etc
FunnyHighway9575 t1_jabk3vr wrote
Reply to ELI5 How do banks work? by RussianPremier
They loan your money to other people and charge interest to get the loan. So if you keep your money in a savings account, the bank gives you 0.01% interest but can turn around and give your money to many other people and charge let's say 5% interest or more to the ones receiving it.
They also charge fees like maintenance fees, annual fees, membership fees, etc