Question

Charlie deposits, or invests, his paycheck in a savings account. The bank can then offer some of the money to a borrower in the form of a loan. How can Charlie benefit financially from this relationship?

Charlie can feel good that he is helping a borrower.


Charlie can choose to invest his money in another bank that does not make loans to borrowers.


Charlie can decided to take his money out of the savings account.


Charlie can earn interest on his original deposit.

Answer 1

charlie can earn intrest on his original depost is the answer

Answer 2

The answer is: charlie can earn interest on his original deposit

The average interest rate for saving account is around 0.08% annually. this number is considered to be small compared to other form of investments, but extremely safe since it is insured by the federal government.

To increase the earning from his saving, Charlie could opt to put his money on certificate of deposit. By doing this, Charlie could increase the interest rate that he obtained with one downside. He would not be able to take out the saving unless the maturity date on the certificate of Deposit is over.