0 D Vocabulary

C o m p l e t e each sentence with a word or phrase f r o m the box.

accessible ATM «compensate

deposit make a living reliable

I security sensible • transfer

withdrawal

Banks As against possible burglaries, they

installed alarms.

If you work, you've probably got a bank account.

Some people aren't very

with their

You could keep the m o n e y you earn each month

money and they waste it on useless things.

If you are injured at work, you may get money to

for losing your salary.

If something is you can trust it to work properly.

things are easy to reach or to get. When you things you move them

from one place to another.

7 An is л machine that gives

customers money when the bank is closed. Most people have to work m order to

• When you make a you put money

into your account. When you make a you take money out of your account.

in a I k j x under your bed. but it wouldn't Iv very sensible. < >ne reason is thai it's not vcr\ salt If your house get1» burgled, you'll b>>t everything you've saved A n o t h e r reason is that your monev will lose value.

As prices rise, the m o n e y in a l*>\ under your bed will be able to buy f e w e r and f e w e r things. Monev in a bank savings account, however, will earn interest. T h e interest will help compensate fot the effect of inflation. Hut banks are m o r e than just safe places for your m o n e y What o t h e r services do they offerV

T h e other main service is lending m o n e y Individuals and businesses often need to lx>rrow m o n e y , and they need a lender that I hey can trust This is exactly what banks are - reliable lenders. In fact, most of the m o n e v that people deposit in their bank accounts is immediately lent out to s o m e o n e else.

Apart from storing and lending money, banks offer other financial services. Most of these arc w ays of making m o n e y m o r e accessible to customers. For example, banks help people transfer monev securely. T h e y give customers cheque books and credit cards to use instead of cash They provide A T M machines so that j K o p l e can get cash any time of the day or night

M. t• ' ft t i 69

Bui how Jo banks make a living- basically, they make a living by charging intere.st on loans. < )1 course, when you make a deposit into a bank savings account, the bank pays you interest on that money However, the rate they pay savers is less than the rate they charge borrowers The extra money they make by charging interest on loans is whi te banks earn most ot' their money

For banks, interest is also a kind of security. Sometimes people do not pay back money they borrow This is called liefaultim• on к loan When someone defaults on a loan, the bank uses money earned from interest to cover the loss.

All of this means that most of the money people have saved in the bank is not there at all! Л small amount of the total savings is kept by tin bank so that customers can make withdrawals. The rest, however, is made available for loans. The amount that is kept is called the reserve. The reserve must lie a certain percentage of ill the savings received from customers - for example JO per cent. This tigure is set by the central bank, and this is one of the ways iliat governments can control the amount of money circulating in the economy.