A bank is a business. It takes in deposits. It makes loans. Putting money in a bank is called making a deposit. A bank keeps people's money safe. It keeps the money safe until they want to use it. A bank is a safe place for money.

You can take your money out when you need it. Taking money out is called a withdrawal. An ATM is a machine. People can take money out of their bank account there. It is their own money.

Banks combine many people's savings into one pool. They lend that money. They lend it to people who want to borrow. Someone who borrows from a bank pays interest. Interest is the price of using someone else's money. Borrowing is using money that is not yours.

Borrowers pay the bank interest. The bank passes a small part of what it earns to savers. A savings account is a bank account. It is for setting money aside. The bank pays interest on it. Savers set money aside.

A bank that pays 3 percent interest a year adds $3 to $100 kept in a savings account for a year. Money kept in a jar at home does not earn any extra money. Money in a bank savings account can. A jar does not add a cent.

Money kept at home can be lost to a fire or a burglar. In an FDIC-insured bank, people do not have to worry about their money being lost or stolen. The FDIC is a United States government agency. It protects people's money in banks if a bank fails.

Words to know

• deposit: money put in
• borrow: use others' money
• interest: price of borrowing
• savers: people saving money