How does a bank actually make money?
Your account is free because you are not the product being sold. Your deposit is.
The bank pays little for deposits, charges more for loans, and adds fees on the side. The gap is the business.
Engine one: the spread
A bank pays you very little on your balance and lends that money out at considerably more. The gap is net interest margin, and for most banks it is the whole business.
This is why free current accounts exist. Your deposit is raw material. A bank does not need your monthly fee when your idle balance is funding a mortgage at several points more than it pays you.
And it explains something that otherwise looks random: when central bank rates rise, lending rates move within days and savings rates move slowly, if at all. The gap widening is not an oversight.
Engine two: fees
Account fees, transfer fees, card fees, and the ones that carry a moral charge: overdraft, late payment, insufficient funds.
Penalty fees are unusual as a revenue line because they are concentrated. A minority of customers, often the ones with the least money, generate most of them. That concentration is exactly why regulators keep returning to them, and why several markets have capped or banned them outright.
Engine three: interchange
Every card payment sends a slice back to the issuing bank. It costs the bank almost nothing incrementally, which is why a card in your pocket is worth more to them than an account you never use.
Follow that incentive and the entire rewards industry appears. Points are a rebate on interchange, offered to make you spend on this card rather than that one.
Engine four: float and what sits behind it
Money in transit, unspent balances, and reserves earn a return while the bank holds them. Individually trivial, at scale substantial.
Why this is worth knowing
It gives you a lens rather than a list. When a bank offers something free, ask which engine it feeds. A free account feeds engine one. A generous rewards card feeds engine three and hopes you carry a balance for engine two. A high savings rate offered only to new customers feeds engine one at the expense of loyal customers who never check.
The offer is rarely a gift. It is usually a bid for the input to whichever engine the bank most wants running.
A car park that charges almost nothing to leave your car. It makes its living on the fact that a full car park is worth more than an empty one, and on the twelve people a day who overstay.
Where you meet it
Every free account, every rewards card that seemed too generous, every savings rate that moved a month after the lending rate did.