Prepared Speech:How Do Banks Work
You may think banks work by you just putting money in and taking money out, to keep your money safe, and maybe the bank gives it to someone else, but you’ll always get your money back, but there’s more to this.
Say for example 4 people put $500 in the bank and then someone withdrew $500’000 from the bank, NOT the account, the 4 people from earlier would get 4% interest of $500, but the other man would have to give 20% more of the money he withdrew back to the bank.
But there’s a whole lot more to them. Now I’ll tell you about interest, interest works by percentage, and percentage is a fraction of 100. Normally you’d have 4% but you may have more. So say for example you have $500 in your bank and have 4% interest, then every year you’ll get $20 free of charge without doing anything. There are 2 types of ways to bank; online banking and going to the bank.
The majority of banks make you pay some money just to have an account, as a payment to look after your money. But others don’t do this.
So banks are kind of money making machines but you don’t make the most profit the bank does, all because of the extra 20% we were talking about earlier.