People often borrow, also, in order to pay for college. And a person who is starting up a new business will need to borrow money, too. If a woman named Fiona wants to open an arcade in a mall, she may expect to make a lot of money as kids pile in to play games, but first she needs to borrow money. Fiona needs enough money to rent space in the building, to buy or rent some pinball machines and other amusements, to hire some people work for her, and to place advertisements in newspapers. When it lends money, it charges interest.
Interest rates change all the time, though, as the economy changes.
In the 1970s, interest rates were very high. In the early to mid-1990s, rates were very low. This can be very depressing if you're trying to watch your money pile up in a savings account. On the other hand, when rates are low, a lot of people decide it's a good time to buy a house, because they'll be charged very little interest on the loan. Now that you have a handle on what banks do and how much they pay you in interest, look at our How To Invest area where we tell you some other ways you can make your money grow.