You saw an extra token added to a pretend record. Interest is payment for using money. A borrower may pay interest on a loan. A bank may pay interest on money held in a deposit account.

These payments go in different directions. A borrower pays the bank under a loan agreement. The bank may pay a saver under an account agreement. The agreements set the rules; the extra amounts are not unexplained gifts.

In our invented round, a borrower returns ten borrowed tokens plus two interest tokens. The bank adds one interest token to a saver’s record. These are pretend amounts chosen for the game. They are not a real offer or a rule for every bank.

Trace each extra payment separately. A bank also has costs, so the difference between two payments is not automatically its final profit. The useful discovery is why an extra payment can exist and whose agreement it belongs to.

The word may matters. A bank account does not automatically earn interest just because it exists. The account’s terms describe whether interest is paid and how it is worked out.

A rate compares a payment with an amount over a stated time. If a pretend rule pays one token for ten held for one round, both the ten-token amount and the round belong in the rule. Leave either out and the comparison loses information.

Two fictional accounts can have different rules. One may add a token; another may add none. You can compare those records without calling one a recommendation for a real family.

Return to your first guess. If you wrote that every account must get extra money, the agreements give a reason to reconsider. Our game names the rule before the round begins. Real accounts also have conditions and possible costs that this small paper model leaves out.

together · About 8 minutes; estimate

You need

• Paper scraps and pencil

Try it

1. Write fictional borrower, bank and saver labels.
2. Write loan rule: ten borrowed, ten repaid plus two interest tokens after one pretend round.
3. Draw the borrower’s two extra tokens moving to the bank.
4. Write saver rule: bank adds one interest token after that round.
5. Choose one pretend bank-cost token and show where it goes.
6. Compare the extra payments and record what is left from them.