Banking Basics
Understand how banks work, different types of accounts, how interest grows your savings, and how to keep your money safe.
What Is a Bank?
A bank is a safe place to keep your money. Banks also lend money to people who need it (like for buying a house) and pay you a little bit extra for keeping your money there.
How a Bank Works
You deposit money
Put money into your account
Bank keeps it safe
And lends some to others
Bank pays you interest
A reward for saving!
Types of Bank Accounts
Savings Account
- ● For money you want to keep and grow
- ● Earns more interest
- ● Best for long-term saving
- ● May have limits on withdrawals
Everyday Account
- ● For money you use regularly
- ● Earns little or no interest
- ● Easy to access with a debit card
- ● Good for daily spending
Interest: The Bank Pays YOU
When you put money in a savings account, the bank pays you interest. It is like a reward for letting the bank use your money. The more you save and the longer you leave it, the more interest you earn.
Simple Interest Example
You put $100 in a savings account with 5% interest per year.
| Year | Start Balance | Interest (5%) | End Balance |
|---|---|---|---|
| Year 1 | $100.00 | +$5.00 | $105.00 |
| Year 2 | $105.00 | +$5.00 | $110.00 |
| Year 3 | $110.00 | +$5.00 | $115.00 |
After 3 years, your $100 has grown to $115 — you earned $15 just by saving!
Ways to Access Your Money
ATM
Automatic Teller Machine. Withdraw cash using your card and PIN.
EFTPOS / Tap & Pay
Pay at shops by tapping your card or phone. Money comes straight from your account.
Online Banking
Check your balance and transfer money using a computer or phone app.
Bank Branch
Visit the bank in person to deposit or withdraw money.
Keeping Your Money Safe
Never share your PIN — not even with friends. Your PIN is like a secret key.
Use strong passwords for online banking. Mix letters, numbers, and symbols.
Watch out for scams — banks will never ask for your password by email or text.
Tell a trusted adult if anything seems wrong with your account.
Key Vocabulary
Interest
Extra money the bank pays you for keeping your savings with them.
Deposit
Putting money into your bank account.
Withdrawal
Taking money out of your bank account.
Balance
The total amount of money currently in your account.
Worked Examples
You put $200 in a savings account at 5% interest per year. How much interest after 1 year?
Step 1: Interest = Amount x Rate
Step 2: $200 x 0.05 = $10
Answer: You earn $10 interest. Your balance is now $210.
Your account balance is $150. You deposit $30 and then withdraw $20. What is your new balance?
Step 1: $150 + $30 (deposit) = $180
Step 2: $180 - $20 (withdrawal) = $160
$500 saved at 10% interest for 2 years (simple interest). What is the total interest?
Step 1: Interest per year = $500 x 0.10 = $50
Step 2: For 2 years = $50 x 2 = $100
Answer: Total interest = $100. Balance = $600.
Knowledge Check
Select the correct answer for each question. Click "Check Answer" to see if you are right.
Question 1
You save $300 at 5% interest for 1 year. How much interest do you earn?
Question 2
Which type of account is best for saving money over a long time?
Question 3
Your balance is $80. You deposit $25 and withdraw $10. What is your new balance?
Question 4
You receive an email saying "Your bank needs your password urgently." What should you do?
Question 5
$1,000 at 10% simple interest for 3 years. What is the total interest earned?
Key Concepts Summary
- ●A bank keeps your money safe and pays you interest for saving.
- ●Savings accounts earn more interest than everyday accounts.
- ●Simple interest formula: Interest = Amount x Rate x Time.
- ●You can access money via ATMs, EFTPOS, online banking, or in person.
- ●Never share your PIN or password. Watch out for scams!