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#301192 - 05/12/17 02:24 AM 'Splain This to Me, Please
Spag-hetti Offline
member

Registered: 09/10/08
Posts: 1662
Loc: Middle, USA
I'm not a mathematician, so help me out here.

When I use the bank's money ... for a mortgage, a car loan or a credit card ... I'm ok if the interest is around 6% (I chose that number because the math easy). Paying 6% per annum means I'm paying (6 divided by 12) .5% per month. So, if somehow, I consistently carried a balance of one thousand dollars, I'd pay five bucks a month in interest on that debt. Right?

But if I consistently have a thousand dollars in my savings account, for three freaking months, I get less than a quarter. For one month, a few pennies.

Using someone else's money, for 'them,' costs pennies, for me (us?) it costs bucks.

What???? Is that right? I'm so confused. It HAS to be my math. Help me out here, Am I doing it wrong?
_________________________
Just a Missouri school teacher ... stubborn as a mule and addicted to logic.

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#301193 - 05/12/17 05:48 AM Re: 'Splain This to Me, Please [Re: Spag-hetti]
NW Ponderer Offline
Moderator
Carpal Tunnel

Registered: 09/09/11
Posts: 15967
You're only doing it wrong if you don't own the bank....
_________________________
A well reasoned argument is like a diamond: impervious to corruption and crystal clear - and infinitely rarer.

Here, as elsewhere, people are outraged at what feels like a rigged game -- an economy that won't respond, a democracy that won't listen, and a financial sector that holds all the cards. - Robert Reich

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#301194 - 05/12/17 05:50 AM Re: 'Splain This to Me, Please [Re: Spag-hetti]
pondering_it_all Offline
veteran

Registered: 02/27/06
Posts: 7614
Loc: North San Diego County
No, you are right. That's how banks, savings and loans, and credit unions make money. And they make A BUTT-LOAD of money!

It used to be they would pay savers 5% and charge lenders 10%. Now interest rates are low, so pay savers nothing much (pennies) and charge lenders 3%, 5%, 19%. Depends what kind of loan and how credit-worthy you are.

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