[carlosjobim]

They lend your money out to other people paying a higher interest. In fact, they lend your money out several times.

Even if your bank pays 0% interest, they are lending your money out many times over to people who pay the bank interest.

[carlosjobim]

Reply to the poster below me, who was censored for some reason: AFAIK the money that people have in their bank accounts are used as reserves for all loans the banks give. I don't know of any separation of funds.