4.10E Financial Institutions

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What is a bank?

Back

A bank is a financial institution that accepts deposits from the public, provides loans, and offers other financial services.

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What do banks do with the money they receive from deposits?

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Banks use the money from deposits to lend to other people and businesses, charging interest on the loans.

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What is interest?

Back

Interest is the money paid by borrowers to lenders for the use of borrowed money, usually expressed as a percentage.

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Why do people deposit money in banks?

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People deposit money in banks to keep it safe and to earn interest on their savings.

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What is a loan?

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A loan is money that is borrowed and must be paid back with interest.

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What is the purpose of a savings account?

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A savings account is used to save money while earning interest on the balance.

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What is a checking account?

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A checking account is a bank account that allows for easy access to funds for daily transactions.

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What is a financial institution?

Back

A financial institution is an organization that provides financial services, such as banks, credit unions, and insurance companies.

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What is the role of banks in the economy?

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Banks help facilitate economic activity by providing loans for businesses and individuals, and by managing deposits.

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What is a credit union?

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A credit union is a member-owned financial institution that provides similar services to banks but often with lower fees and better interest rates.