I would love you to point me to the US bank that will give me that much on my savings. Right now Bank of America is paying me 0.20% a month and their high yield CDs are 4.5%.
Let’s not forget that the banks also invest themselves in stocks, corporate loans and other short and long term instruments. Either way, bottom line, $300,000 will come out of your pocket within 30 years from the interest alone, and I doubt that my bank will spend more than $10,000 servicing my loan during these years.
Considering that banks are smart enough to offset the interest from the deposits they got to give me the money for the loan (investing in Harrah’s stocks, for example) – it still comes to a good chunck of profit and $500 cannot come close to 1% of it.