New words for this lesson
Say them out loud. Then use one word in a sentence.
Where is your €100 right now?
You deposit €100 at your bank. You walk out. The money is gone from your hand — but it is still yours.
🤔 So where is your €100?
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There is no box. Your account is a number in a system — a promise that the bank owes you €100.
The bank keeps only a part of the money ready. Most of it is lent to other people.
A bank sits in the middle
The bank pays savers a small interest. It asks borrowers for a bigger one. The difference is how the bank earns money — plus fees for some services.
🤔 Why does a bank pay you interest at all? It is your money.
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Because the bank wants to use your money while you don't need it. Interest is the price it pays you for that. No savers, no loans.
One €100 note, five steps
| Step | |
|---|---|
| 1 · You deposit €100 | your balance: €100 |
| 2 · The bank keeps a part ready | for withdrawals |
| 3 · The bank lends the rest out | to a borrower |
| 4 · The borrower pays interest | to the bank |
| 5 · The bank pays you a small part | your interest |
Your €100 stays your €100. You can take it out any time — the bank simply works with the money in between.
What if everybody comes at once?
🤔 If every customer asked for all their money on the same day, could the bank pay?
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No. Banks never hold all the deposits as cash — that is how banking works everywhere.
That is why there are strict rules. In the European Union, bank deposits are protected by a deposit guarantee scheme up to €100,000 per person and per bank.
Zusatzwissen · extra knowledge
When too many people want their money at the same time, this is called a bank run. It is rare — but it has happened. Deposit protection exists exactly to stop panic before it starts: if people know their money is safe, they don't run.
Everyday money and sleeping money
A current account is for everyday life: your card, your transfers, your bills. Money moves in and out all the time.
A savings account is for money you don't touch. It usually pays a bit more interest — that is the bank's way of asking you to leave it there.
🤔 A bank pays 2% on savings and asks 7% for a loan. (Example numbers.) Why is the loan number bigger?
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The difference pays for the bank's costs — staff, apps, buildings — and for its risk: some borrowers never pay back. What is left is the bank's profit.