What Banks Actually Do

A bank pays 1% on deposits and charges 6% on loans. What is that 5-point gap called?

• The reserve requirement
• The spread, which drives net interest income
• The deposit insurance limit

You hold $200,000 in your own name at Bank A and $200,000 in your own name at Bank B, both FDIC-insured. How much is insured?

• $250,000 in total
• All $400,000, because each bank has its own $250,000 limit
• $200,000, because only one bank counts