You took a deep breath, opened the door of the bank down the street, and nervously strolled over to the New Accounts desk to open a savings account. And now you're picturing the interest rolling, making your money grow. When you save your income by putting it in the bank, you are pooling your money with other savers. These savings provide some of the money businesses and individuals borrow to build new factories, buy new cars or remodel houses. These loans enable businesses to expand and produce more goods and services, so our economy grows.
Banks charge borrowers a higher rate of interest than they pay to savers.
Let's use the newspaper to learn more about what credit is and does. Locate and clip an ad for a bank savings account. Circle the interest rate given in the ad. Then locate and clip an ad for a bank loan. Circle the interest rate and calculate the difference between savings interest and borrowing interest.