HOW TO MAKE MONEY IN BANK INTEREST (AND HOW BANKS MAKE MONEY OFF YOU)

Ever wondered how to make money in bank interest? It’s kind of like planting a tree in your backyard. You stick your cash (the seed) into a bank account, and the bank waters it with interest. Over time, your money grows a bit bigger. The best part? You don’t have to do anything except let it sit there!

But here’s the twist: while you’re earning that little sprout of interest, the bank is using your money to grow their own orchard. Let’s break it down.

Your Interest, Their Investment

When you deposit money in a savings account, the bank doesn’t just let it chill in a vault like in old-timey movies. Nope!

When you stash your cash in a savings account or certificate of deposit (CD), the bank pays you a little something called interest. It’s like a thank-you note for letting them "borrow" your money. For example, if you deposit $1,000 into a savings account with a 3% annual interest rate, you’ll earn $30 by the end of the year—almost enough for a pizza night!

But here’s where the plot thickens: banks don’t just hand out free money. They turn around and lend your cash to others through loans, credit cards, and mortgages. They charge borrowers higher interest rates than they pay you. So, if they give you 3%, they might charge someone else 10% on a car loan. That 7% difference? That’s their profit. Banks are basically middlemen in a financial matchmaking service, pairing your idle dollars with borrowers willing to pay to use them.

For you, the upside is that the bank pays you a teeny slice of that profit as interest. If you pick the right account, like a high-yield savings account or a CD (certificate of deposit), your slice can be a little bigger.

How To Make Money In Bank Interest

Here’s the hack: shop around! Not all banks pay the same interest. Big traditional banks might offer you a rate so small it’s like earning pennies on a dollar, while online banks or credit unions often have higher rates. And let’s not forget compound interest—that’s when you earn interest on your interest, creating a snowball effect. It's like your money is hosting a little party and inviting more cash to join.

Our personal favorite way to put aside money for emergencies or a "rainy day" is to use high-yield savings accounts aka HYSAs. We shared some of our favorites here.

Why It Matters for You (And Your Kids!)

Learning how banks and interest work isn’t just good trivia; it’s essential for making smart money moves. For adults, this means understanding how to grow your savings. For kids and teens, it’s a stepping stone into understanding bigger concepts like investing, credit, and financial independence.

That’s where KidVestors comes in. We teach kids, teens (and, let’s be real, a lot of grown-ups too) how money works—beyond just putting it in the bank.

We teach families how to grow their money through investments, entrepreneurship, and smart money management. Think of us as your personal finance mentors, showing you how to take that same $1,000 and make it do cartwheels in the stock market, real estate, or even a kid-friendly business venture. Our interactive platform makes learning fun with games, avatars, and rewards (hello, KV Bucks!).

So, go ahead and put your money to work in an account—but don’t let it stop there. Because the ultimate goal? To turn those money trees into a thriving forest of financial freedom.