Category
📚
LearningTranscript
00:00Are you going to tell me why we're here? I've got a lot of stuff to do today!
00:10Dear Tim and Moby, Regards and felicitations from the Federal Republic of Zurundi. As discussed
00:17in our prior email, please wire $500 to myself, Philippe Pilfponts-Henry III.
00:25Once I receive that, plus your checking account number, I will forward you the code to a numbered
00:32Swiss bank account containing $32 million. Please hurry, as our mutual benefactor is
00:40in great danger. Yours, Philippe Pilfponts-Henry III.
00:46I don't know what I was thinking, opening a joint checking account with you.
00:51P.S. My son loves your movies. Can you tell him how banks work?
00:57Well, sir, you are a scam artist, so we won't be sending you any money.
01:02But sure, as long as we're here, we'd love to do a movie on banking.
01:06You probably know the basic idea. Banks and credit unions are where you store and manage
01:12the money that you use in your everyday life. This is called banking.
01:17The two offer similar services, but banks are businesses run for profit using your money
01:22to make money, while credit unions are non-profits run by and for their members.
01:29Both are much safer than hiding your money at home, where it can get stolen, lost, or destroyed.
01:38Oh, sure, a bank or credit union can get robbed, go out of business, or be destroyed like any
01:43other building. But the money you keep there is insured by the federal government.
01:49If anything happens to it, you'll get up to $250,000 of it back.
01:54Another benefit to banking your money is that some accounts pay interest, a percentage of
01:59your cash the bank gives you for keeping your money there.
02:06Well, the amount of interest depends on the kind of account you open.
02:10The two basic types are checking and savings.
02:14A checking account is kind of like a big wallet. You use it to pay for day-to-day expenses
02:18like rent, food, clothes, and entertainment.
02:23Most checking accounts come with a debit card.
02:26You can use them to get cash from ATMs or to pay for stuff at stores.
02:31The money will come straight out of your account.
02:35Same thing goes with certain banking apps. They connect to your checking account to let
02:39you pay people or merchants directly.
02:42Which reminds me, you still owe me for those tacos.
02:47Thanks.
02:49Some people and businesses also let you pay by check.
02:53It's a sort of paper IOU that you fill out, telling your bank to give a person or business
02:58a certain amount of money.
03:01But you have to be careful. If you write a check for more than you have, you'll overdraw
03:05the account. And that can mean big penalty fees.
03:12Stop that.
03:20So, it's always important to track your balance, the amount of money in your account.
03:26There are lots of different ways to do that. Online, through an app, at an ATM, or here
03:31with a bank teller.
03:34Right. The other type of bank account is a savings account for, well, saving.
03:39People use them to put money away for bigger expenses, like furniture, electronics, or
03:44a new bike.
03:46They also use it to sock away emergency funds, meant to pay for unexpected expenses.
03:52It's often harder to take out or withdraw money from a savings account than it is from
03:56checking. You can't make more than six withdrawals a month, for example.
04:01And you usually won't have easy access through a debit card or app.
04:05But unlike most checking accounts, banks pay interest on savings accounts.
04:12Yeah, it's sort of like a fee that the bank pays you for letting them use your money.
04:18After all, when you deposit money in your account, it doesn't just sit there.
04:24The bank lends most of it out to other people, who themselves pay interest to the bank for
04:28using it.
04:30The bank makes a profit by charging them more interest than what it pays you.
04:37Well, the amount of interest usually has to do with risk, meaning the potential for loss.
04:42When you put your money in a savings account, you're not taking much of a risk.
04:46By law, banks have to be able to give your money back when you want it.
04:50So the interest you earn is low, just one or two percent.
04:54Meanwhile, banks take bigger risks when they make loans.
04:58Without bank loans, most people wouldn't be able to buy houses, cars, or other major stuff.
05:04Most new companies begin with a loan.
05:07And existing businesses are constantly taking out short-term loans, too.
05:11For example, a ski shop might take out a loan to stock up before winter,
05:17then pay it back after the season is over.
05:21Sometimes, though, things don't work out, and the borrower can't pay the bank back.
05:26Because of this risk, the bank asks for higher interest from the people who take out loans.
05:33You want to take out a business loan?
05:36Yeah, a bank won't give money to just anyone who asks, you know.
05:39They're going to want to see a business plan.
05:44A free-range, organic bug farm.
05:48You know, if I were a bank, I'd sooner give my money to Philippe Pilfponts-Henry.
05:55Yes, the third.