Interest Income Explained: How Sergio Earned $5 Last Year

How did Sergio earn $5 last year?

Sergio earned $5 last year through which type of money payment?

The $5 earned by Sergio from the extra payments made by other customers using his money would be considered interest.

Explanation:

When a bank lends money to customers, they charge interest on the loan. This interest is a fee charged by the bank for the use of the money. In Sergio's case, the bank lent a portion of his money to other customers and charged them interest. A portion of this interest is then deposited into Sergio's account, which is how he earned $5 last year.

Interest is a form of income for lenders, and it incentivizes people like Sergio to keep their money in the bank. It's important for individuals to understand how interest works when depositing money in a savings account or taking out a loan.