Why is there a difference between interest charged and interest earned? A) Banks are non-profit institutions. B) Banks are profit-making institutions. C) Banks must pay more than they receive. D) There is no difference between interest charged and interest earned.

The correct answer is choice b.

Banks are profit-making institutions. Their purpose is to make a profit for their owners or stockholders. They need to charge more interest on the money that they loan out than what they pay on savings accounts so that there is a profit for them.