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Ever wondered what banks do with your money? Or what happens when you pay for something in a shop with a debit card? Click GO to find out this and more – there's loads to explore!  

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Bank accounts

You can keep your money safe by putting it in a bank account. The bank keeps a record of how much you have, and pays you money called interest on your savings.

When your account has money in it, you can use a debit card to pay for things in shops with the money from your account. A debit card also lets you take your money out of a cash machine whenever you need it.

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Borrowing

Banks lend money to people who want to buy something expensive, or start a business. This is called a loan. Without bank loans, many people would not be able to buy cars or houses.

Loans are paid back in instalments – a bit at a time – and the bank also charges money for borrowing the money. This money is called interest. Banks are businesses, and charging interest is how they make money.

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Businesses

Many businesses need to borrow money from a bank to get started. The business keeps its money safe in a business bank account, and might borrow more money to grow bigger.

When a customer pays for something using a debit card, the money goes straight into the business’s bank account. Businesses can also pay wages directly into workers’ bank accounts.

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Government

Almost all countries have a central bank that controls how much money is printed, sets interest rates, and lends to the other banks.

Governments set rules about how banks are run, including how much money they can lend at any one time. This is so that savers can get their money when they need it.

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Bank to bank

Banks borrow money from each other all the time to make sure they always have enough to pay everyone who wants to take money out of their accounts.

When banks lend to banks in other countries, they change the money into the foreign currency used in that country – such as euros in France. They can change money for businesses and for people going on holiday too.

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Big projects

Banks sometimes lend out money to help pay for expensive projects like airports. As long as the project makes money, the bank will get back more than it lent.

Banks also lend money to develop new technologies that might make money in the future.

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