HOW BANKS WORK

What is a bank?
A bank is a company where money can be saved or borrowed from. Banks pay
interest in return for holding money. Banks make money by loaning money out to
other people and businesses at a higher rate of interest.
What is interest rate?
Interest rate is what it costs to borrow money for a certain amount of time. If you
borrow money from the bank, then you pay the bank interest. If the bank borrows
money from you, then they pay you interest. For example, the interest rate might
be 2% per year on $500. In this case, the interest that would be paid for one year
would be $10.
Why are banks important?
On one hand, banks provide the service of keeping people's savings safe. On the
other hand, they use that money to help people buy houses, cars, and start
businesses. Banks also invest money to build up their reserve of money. What
they do is regulated by laws. Banks are an essential part of the modern economy.
Transactions
Getting money in and out of your bank account is called a transaction. There are a
number of ways to put money in or take money out. The most obvious way is to
go to the bank physically and get your money or give them money. Some other
ways include:
 ATM: Stands for Automated Teller Machine. Banks give customers a card to be
used at ATMs which may be located in different places like a grocery store or a
gas station. With this card and a password, the ATM will give you cash and
deduct it from your bank account.
 Debit Card: It is a card you can use to buy things directly. In debit cards the
money comes directly out of your bank account.
 Electronic Transactions: Money can even be moved in and out of a bank
account electronically. Many people get their payments sent directly to their
bank account using direct deposit. The money is sent electronically from their
employer's bank.
 What if the bank goes out of business?
You might think your money is completely safe, but what if the bank is robbed or
goes out of business? Most bank deposits (up to a certain amount) are protected
by the government through the Superintendencia de Banca y Seguros (which is
usually just called the SBS).
BASIC VOCABULARY
1. Borrow : Prestar
2. Hold : Guardar
3. Loan : Prestamo
4. Business : Negocio
5. Interest Rate : Tasa de interes
6. Amount : Cantidad
7. On one hand : Por un lado
8. Customer : Cliente
9. Payment : Pago

LET’S WORK
HOW BANKS WORK

K A S V Z I B J F X N B E Y R

D F C N E W N R D O C K G M Y

E R A C X X V T I E E A M O U

O O A L O O S T E U T Y U N B

L Y F C W U C I T R I A L O E

N F K P S A N R J G E M R C F

K J Q O S F N T R E G S X E H

C G V N R E M O T S U C T Z Z

B I A W K W Q T T I S O P E D

E R Y Q O F D I N T N U O M A

T D Z R K N A B G E B Y S S W

W V R U M B T X S V M G G K U

J O J B U S I N E S S Y F D F

B M O N E Y E R G P D S A N D

U D J I H T Q K L G G Q B P U

ACCOUNT AMOUNT BANK

BORROW BUSINESS CARD
CUSTOMER DEPOSIT ECONOMY
INTEREST LOAN MONEY
PAYMENT RATE TRANSACTION