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What Do Banks Do?
You probably have an idea of what banks do, but
maybe not specifically.
| Here are some of their basic services: |
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Banks keep your money safe, so it can’t
be stolen or lost. |
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 When you put money in a savings account at the
bank, it uses your money and pays you interest,
or “rent” money for using your cash.
In the U.S. banking system, this is totally legitimate,
unlike some other countries’ banking systems.
The safety of the U.S. banking system is one reason
why so many people use it, including foreigners! |
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Banks issue checks for your checking account.
Checks are a written “order” for money
written on a standard form. They are a way you
can use your money in the bank without having to
go to the bank in person and take money out. |
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But, how can I be sure my money
will be safe in a bank? I’ve heard stories of how
people lost all their money after they put it in a bank.
In the United States, banks must keep your money safe.
The reasons why can be explained by remembering the lesson
on cash flow—tracking money coming in and money going
out.
Keeping cash flowing is very important, not only for your
own financial benefit, but for an entire nation as well.
Picture it this way. When you spend money, other people
make money, say a store owner where you buy your sodas.
Then that store owner spends money, and so on—cash
keeps flowing. When that happens, families, communities,
cities, states and nations usually thrive. A thriving nation,
like the United States, attracts people from other countries.
Some end up making their living here. The United States
is considered a wealthy nation because it keeps a lot of
cash flowing.
The people who run the United States want it to stay wealthy.
So they enforce many laws that make banks keep your money
safe so you can keep your cash flowing!. These laws also
require banks to give your money back to you, usually with
interest, whenever you ask for it. And your money is always
protected no matter what happens to the bank. For every
account you open at a bank, your money is insured, up to
$100,00. This means that if a fire ever broke out at your
bank, or it was robbed, your money would be protected by
this insurance.
If you’re still unsure about all this, ask your parents
or teachers to try to arrange a meeting with a banker in
your neighborhood. He or she will be able to explain the
safety of banks even more and answer all of your questions.
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