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A bank is an entity that makes money by taking in deposits from customers and then lending to other customers. A bank profits by charging a higher interest rate on loans than it pays out to depositors.

Expanded Definition

Commercial banks offer a variety of services. Most common are a checking account, a savings account, and certificates of deposit (CDs). They also offer a variety of loans including auto loans, personal loans, mortgages, home equity loans, and lines of credit. Many offer overdraft protection. Most sell US Savings Bonds. They offer cashier's checks and certified checks. They can arrange wire transfers. Additional services are available to business customers.

Larger banks often have a trust department. They provide trust management services and often sell local municipal bonds. Some offer wealth management services.

Modern banks are becoming more complex financial institutions. Many are adding brokerage services. Some now sell annuities, insurance products like life insurance and accident insurance.

Compare: Investment bank

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