Money and Banking Basics

A bank is a business that keeps money safe, offers loans, and provides many financial services. People use banks because they are a secure place to store money, and banks also help people save for the future and borrow money when they need it.

What Banks Do

• Store money safely in accounts so it is protected and available when you need it.
• Give loans — banks lend money to people or businesses that need it, and the borrower pays it back over time with interest.
• Pay interest — when you keep money in a savings account, the bank pays you a small amount of extra money called interest.
• Provide services such as ATMs, debit cards, and online banking.

Key Banking Terms

• Account: a record of your money held at a bank.
• Deposit: adding money to a bank account.
• Withdrawal: taking money out of a bank account.
• Interest: extra money paid by the bank for keeping your savings, or money you owe when you borrow.
• Loan: money borrowed from a bank that must be paid back with interest.
• Savings: money set aside and kept in an account for future use.
• ATM (Automated Teller Machine): a machine that lets you withdraw cash or check your balance without going inside the bank.
• Balance: the total amount of money currently in an account.

Why People Use Banks

• Safety: money in a bank is much safer than keeping cash at home.
• Convenience: ATMs and online banking make accessing money easy at any time.
• Earning interest: savings accounts allow money to grow over time.
• Borrowing: banks provide loans for large purchases like homes, cars, or starting a business.