--- title: What a bank does with your money and why banks lend — a lesson of Mova's school · trees and pragmatics description: «What a bank does with your money and why banks lend», a lesson of the money course of Mova's primary school, sentence by sentence with dependency trees and pragmatics. It begins: A bank does not just sit on your money: it lends money to other people and businesses, charges them more interest than i --- [Mova](https://md.mova.elamur.ai/free/en/) · [this page in HTML](https://mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/) [home](https://md.mova.elamur.ai/free/en/) / [corpora](https://md.mova.elamur.ai/free/en/corpora/) / [school](https://md.mova.elamur.ai/free/en/corpora/school/) / [Money](https://md.mova.elamur.ai/free/en/corpora/school/money/) / What a bank does with your money and w… # What a bank does with your money and why banks lend Lesson 28 of the money course of Mova's primary school: 14 sentences, each with its syntax tree and pragmatics. The lessons are written for Mova, and their agreed trees are part of Mova corpus 0.4 (CC BY-SA 4.0). How Mova does on its tests: [the lesson at school](https://md.mova.elamur.ai/free/en/school-run/money/28-what-a-bank-does-with-your-money/). - [0](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/0/) — A bank does not just sit on your money: it lends money to other people and businesses, charges them more interest than it pays you, and keeps the difference. - [1](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/1/) — Picture Kai's £100: the bank pays him 2%, which is £2, and lends £100 to someone at 7%, who pays £7; the bank keeps £7 − £2 = £5, and that is how banks make money. - [2](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/2/) — Banks lend to help people buy homes and start businesses, like Ruby's aunt opening a bakery, but first they check the borrower can pay back, because a loan that is never repaid is lost money. - [3](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/3/) — Banks depend on trust: if everyone rushed to take their money out at once, there would not be enough cash in the building, so countries protect savers' money up to a limit and watch banks closely. - [4](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/4/) — Banks lend saved money to people and businesses and charge them interest; borrowers pay more interest than savers get. - [5](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/5/) — If a bank pays a saver £2 on £100 and earns £7 lending £100, it keeps £7 − £2 = £5 profit. - [6](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/6/) — A business loan helps a business start or grow; it is paid back bit by bit, and because of interest the total paid back is more than was borrowed, like £12,000 back on a £10,000 loan. - [7](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/7/) — If a bank lends £100 to each of 10 people and 3 cannot pay back, it loses 3 × £100 = £300. - [8](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/8/) — In 2008 some big banks had lent to people who could not pay back and nearly failed; governments stepped in with bailouts, and people still argue about whether that was right. - [9](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/9/) — Banks check whether a borrower is creditworthy, which means likely to pay back, by looking at income and past borrowing; uneven income makes a bank more careful. - [10](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/10/) — Credit cards charge high interest, like 20% compared with 3% on savings, because lending on cards is risky for banks. - [11](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/11/) — The central bank, like the Bank of England, sets the main interest rate, called the base rate; when it goes up, borrowing usually gets dearer and saving pays a bit more. - [13](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/13/) — A bank run is when lots of people take their money out at once; a bank could run out of cash, which is why trust matters so much. - [14](https://md.mova.elamur.ai/free/en/corpora/school/money/28-what-a-bank-does-with-your-money/14/) — Online banks have no branches but keep money as records, like any bank, and in the UK savers in both get the same deposit protection. - ← previous: [Interest on savings and cash machines](https://md.mova.elamur.ai/free/en/corpora/school/money/27-interest-on-savings-and-cash-machines/) - next →: [Jobs and what people earn](https://md.mova.elamur.ai/free/en/corpora/school/money/29-jobs-and-what-people-earn/) - ↑ back to [Money](https://md.mova.elamur.ai/free/en/corpora/school/money/)