Banking and finance

Banks offer services that have to do with money. For example, banks offer accounts that you can keep your money in. When you put money in a bank account, you trust the bank to look after the money.

People often visit their local bank branch to use the bank's services. A branch is the local office of a bank. Banks can have branches in many different locations.

Read about the jobs of some of the employees, or workers, at a local bank branch.

Online banking

Today, you probably don't have to visit your local bank branch to use bank services. Almost all banks offer services online. And some banks don't have any branches and offer all of their services online! Here are some of the ways you can use online banking:

• You can log in to your account to see how much money you have.

• You can transfer, or move, money between different accounts.

• You can make payments.

• You can see a list of the payments you have made.

People use bank accounts to make deposits and withdrawals.

You make a deposit when you put money into a bank account. You make a withdrawal when you take money out.

What is an ATM?

An automatic teller machine, or ATM, lets you use bank services without the help of a bank employee. You can find ATMs in towns and cities all around the world.

To use an ATM, you insert your account card or debit card into the machine and enter a personal identification number, or PIN. Your PIN works like a password to keep your account safe. After you correctly enter your PIN, you can see all of your account information, make deposits, and withdraw money!

Can you open an account if you are under 18?

Yes! But you have to have an adult over 18 put his or her name on the account, too. Once you turn 18, you can open an account on your own.

An account statement is a record of how much money is in a bank account. About once a month, you get a bank statement for each account you have at a bank.

The amount of money in an account is called the balance.

The balance changes when money is added to or taken from an account.

Account statements also show a record of transactions.

Transactions are the deposits and withdrawals made using an account. When you get money through a transaction, money is deposited into your account. When you use money for a transaction, money is withdrawn from your account. On account statements, deposits are shown in the credit column and withdrawals are shown in the debit column.

It is important to keep up with your bank transactions so that you always know how much money you have. If you overdraw your account, or spend more money than is in it, your account will have a negative balance. A negative balance means you are in debt to your bank. In other words, you owe them money!

What happens if I overdraw my account?

If you try to spend more money than you have in your account, you will likely have to pay an overdraft fee. An overdraft fee is money you have to pay to the bank when you try to spend more than you have in your account. The amount of the fee depends on your bank and the type of account you have, but some banks charge up to $35!

Keeping track of checks

When you buy something using a check, the money is not withdrawn from your account until the person or business you are paying deposits the check. Sometimes, the person or business might not deposit your check right away. If you don't keep track of the checks you write, you might accidentally spend that money on something else!

Most banks will pay you interest for keeping money in an account. You can see the amount of interest you earn on your account statement each month. Look at the statement. Then follow the instructions below.

The sooner you save, the faster your money can grow!

The longer you keep your money in an account, the more interest it will earn! For example, imagine you get $100 for your birthday. If you put it in a savings account that earns about 1% interest each year, here's how it could grow over several years:

• $101 after 1 year

• $103.04 after 3 years

• $110.51 after 10 years

An extra $10.51 might not seem like a lot to get for saving your money for 10 years. But interest earnings can add up the more you save! For example, if you added 100 more dollars to your savings each year, your money could grow to $1,161.76 after 10 years!

How would you spend your money?

Your balance shows you how much money you have to spend. You probably won't have enough money to buy everything you want, so you have to make choices.

Banks do more than just hold people's money. They also provide loans.

A loan is a service that lets you borrow something, such as money, for a certain amount of time.

Why do people need loans?

Loans are very useful. They allow people to pay for big things that they cannot afford right away but that they could pay off over time. Often, people take out loans to pay for things that can improve their lives. Here are a few examples of reasons people might take out a loan:

• Buying a house, car, or other expensive good

• Paying for college

• Starting a business

Whenever you buy something using a loan or borrowed money, you are using credit.

Credit is an important service. It allows you to get or use something now and pay for it later. Banks offer credit.

Loans are one kind of credit, but banks also allow people to use credit in other ways. For example, many banks offer credit in accounts linked to a credit card.

Most of the time, credit lenders will charge interest.

This interest is different from the kind you earn from keeping money in a bank account. In this case, you must pay interest. When you use credit, you can think of interest as the price you pay for borrowing the money.

Do credit cards charge interest, too?

Yes. Compared to other types of credit, credit card accounts can actually charge a lot of interest.

If you pay back the total amount you owe every month before the grace period is up, you won't be charged any interest!

However, most credit cards offer a grace period. If you pay off your balance, or the amount you owe, during the grace period, you won't be charged interest. Credit cards that offer a grace period have to give you at least 21 days to pay after they tell you how much you owe.

Banks and other credit lenders think carefully about who to lend money to and how much to lend. Before making decisions, they try to measure how likely someone is to pay them back.

Borrowers who have more experience using credit or who have paid money back on time in the past may be able to borrow more than others. They may also have to pay less in interest when borrowing money.

Banks offer services that have to do with money. For example, banks offer accounts that you can put your money in. Checking accounts are used to make deposits and withdrawals any time. Savings accounts are used to protect money you don't need to spend right away. They also usually offer the chance to earn more interest, or money the bank pays you for keeping money in an account.

Banks also offer loans and other credit services, which allow people to get or use something now and pay for it in the future.

When you use loans or credit, you pay interest on the money you borrow.