What is a Bank
What is the purpose of a bank?
To help people manage their money safely.
What government agency protects your money in banks?
FDIC.
What’s interest?
Money paid regularly for borrowing or saving.
When you deposit money, does it just sit in the bank?
No—it’s used for loans.
What account is best for everyday spending?
Checking account.
What two types of people do banks connect?
Savers and borrowers.
What’s one reason people save money in banks instead of at home?
It’s safer or earns interest.
Who pays the bank more interest—borrowers or savers?
Borrowers.
What’s it called when banks only keep a portion of deposits?
Fractional reserve banking.
Which account earns you interest over time?
Savings account.
Name one type of bank.
Retail bank, credit union, investment bank, online bank.
What’s one way banks make life more convenient?
Online banking, debit cards, ATMs, etc.
What’s it called when a bank earns more from loans than it pays for savings?
Interest rate spread.
About what percent do banks usually keep in reserve?
10%
What do you use to pay with a checking account?
Debit card or checks.
What’s a financial institution?
A business that handles money-related services.
What’s the insurance limit for bank deposits in the U.S.?
$250,000.
Name a bank fee.
Overdraft, ATM, monthly maintenance, etc.
Why is fractional reserve banking important to the economy?
It helps create more loans and boosts spending.
What’s the difference between a loan and a credit card?
Loan is a lump sum; credit card is revolving.
True or False: Banks can only hold your money.
False—they also lend money, offer credit, and more.
What’s the main benefit of using credit from a bank?
You can borrow money now and pay it back over time.
Why is lending important for banks to stay profitable?
It’s how they make most of their money.
True or False: You can always withdraw 100% of your money instantly.
False—banks might not have all of it on hand at once.
Name two services banks offer besides holding money.
Loans, credit cards, online banking, financial advice, etc.