Banks are the only business in the world that uses somebody else's money to build wealth! Congratulations...your compound interest is helping to build a bank on every corner across America...and it's making them filthy rich.
Here's how it works. When a bank receives money from a depositor, the bank then loans out a portion of that money. This is called fractional lending - it’s how banks make money. They loan out a portion of what has already been deposited. We deposit in - they loan out!
Many banks have minimum amounts of liquidity. That means that they only loan out a certain portion of their total deposits.
For example, let’s say a bank has 50% liquidity; that means that they keep at least 50% of their deposited money ready for customers to withdraw at any time.
But, when you leave that much money just sitting there, the bank isn’t making any significant returns. So… what do most banks do? They loan out most of the money that is deposited by their customers at much higher rates than they pay depositors.
In the US, some banks loan out up to 98%. That means for every $100 deposited, the bank then turns around and lends out $98 to various investments.
If you think about that for a second, it's terrifying.
Let’s pretend that 100 different people open up a bank account at the same bank. They all make similar deposits into their own savings account.
If we use the 98% example, that means that if all 100 people went back to the bank to get all their money out at the same time, ONLY 2 PEOPLE WOULD BE ABLE TO GET THEIR FULL AMOUNT BACK on the spot.
The whole idea of money and banking, in general, is quite shocking once you learn how it all works. But, if you understand how it operates, then you can navigate your way safely and successfully without falling into the banking trap.
We can't avoid using banks altogether, but we don't have to play the bank-game once we understand the flow of money and interest.
For instance, if you got a $300,000 mortgage from your bank at a "record low" interest rate of 3%, you'll be paying your bank almost $9,000 in interest in the first year alone! If you decide to hold onto that loan because of the "record low" interest rate, you'll be putting $155,000+ in interest in the hands of the bank to loan out to somebody else! Banking doesn't have to be in favor of the bank if you understand compound interest and how NOT to pay it.
It might surprise you to learn that your biggest expense isn't your mortgage or your high-interest credit cards, your biggest expense is INTEREST, so if we can reduce a large portion of the interest you pay on your compound interest loans, you can be FREE from the debt altogether in a fraction of the time. For most people, the end result is an effective interest rate of less than 1%. No bank on the planet can offer that!
We are committed to helping others understand how compound interest works and how to reduce it effortlessly. We are "Buying back America...one family at a time."
If you don't mind doing your part to build banks on every corner across America - and if you don't mind them using YOU to build THEIR wealth, keep doing what you're doing.
CLICK HERE if you'd like to see a better way; we're ready to wake you up.
Just fill provide your contact info for a painless overview of how you can kick your debt to the curb at record speed. NO personal information will be requested...EVER. No harassing phone calls. No refi. No credit check. No nonsense.