How do banks work

How do banks work

How do banks work

What is a bank

Have you ever wondered what a bank is? A bank is a room/house filed with vaults. Inside one of the vaults is all your money So no one can steal your money. What if I told you that you can earn money just by lending your money to the bank.

What is interest

Pretend you open a bank account for yourself. Once you give your money to the bank you will get interest. Now you may wonder what is interest and how do you get it? Interest is an insane, immense increase in internal dollars. For example, what could happen is that you give the bank $10 and then another person might want to borrow your money but once they have spent it on their needs (or maybe wants). They will have to pay back your $10 money plus a 70 cents (if its the interest rate). This is called interest. Then once they have given your money back to the bank. The bank splits the 70 cents so you will get 20 cents and the bank will get 50 cents. The 20 cents are your interest.

How do banks make money

The bank uses the interest system to gain money. So they can also buy stuff what they want and use it for themselves. Now you might want to ask how can you trust the bank? You should know that the banks don't only work with 10’s and hundreds of dollars they work with millions and also maybe even billions of dollars. So there is no point in stealing or scamming your money. Banks are highly protected and also have a lot of security so your money won’t be stolen (, maybe sometimes).

What banks can store

Banks have been around since bartering. Banks bring benefits because of billions of bucks. Some banks can also store other precious things E.g. necklace, rings and other precious stones.

I hope you know one or two things about how banks work and interest.