WALT: Explain how banks work

How do banks work?

Intro [Hook and interesting facts] 

Do you know what a bank is? Banks have been around for thousands of years. They are places to keep your money. Most of you probably receive money from: your Parents, on special occasions [like birthdays] or even from the tooth fairy, but usually kids keep their money safe in a piggy bank. Even though your piggy bank seems like a perfectly good place to store your money. When you grow up all your money won’t be able to fit all your money. So you will have to open a bank account and keep your money there. Now you may be asking yourself, how do banks work?

Paragraph 1 [keeping money in a bank]

Banking systems have been around for thousands of years. Banks are safe places to keep your money. Storing your money in a bank is one of the easiest ways to save. For one thing, it is user-friendly. When you have a bank account, you can set up automatic transfers from your checking to a savings account, it is effortless to instantly withdraw money from your savings. Having a bank account makes it easier to track where your money's at.

Paragraph 2 [Paying Interest]

Banks borrow and lend money to people like you and me. When they Borrow money from you they agree to make a payment to you for the money, this is called interest. For example, when you open a bank account you deposit $20.00, by having a bank account you agree to letting the bank borrow the money and use it to conduct banking business. In exchange they agree to pay you interest. For instance, with that 20 dollars you deposit, the bank pays you 2% interest which is an added 40 cents each year. If you don’t withdraw any money, then the total amount in your account will grow over time. 

Paragraph 3 [Profit]

Now you may be thinking ‘How is this possible?’ Well when the bank lends your money to somebody, they are charged with a fee. In other words,when people borrow someone else's money they are not receiving it for free. They have to give back the amount they borrowed plus some extra.  For instance, someone borrowing $20.00 from the bank will pay back the $20.20 if the interest rate is 2%. This is also known as profit.

Paragraph 4 [Conclusion]  

This is just a simple explanation for some of the many things banks do and how they work. Banks are trustworthy places that manage billions of dollars everyday. Their work makes our everyday lives more convenient. Without banks,we wouldn’t have a safe place to store our money for the future.  most people wouldn’t be able to borrow money to get things needed and use in our everyday lives.