ELI5: Why do banks give interest on savings?

Banks give interest on savings because they borrow your money to lend to others and pay you a little back for letting them use it.

Think of it like this: Imagine you have a really cool toy, like a giant Lego castle. Your friend wants to borrow it for a week to show their friends.

• You could say, "Okay, but since you're using my awesome castle, you have to give me some extra Lego bricks when you give it back."

• The bank "borrows" your money (your savings).
• The bank then lends that money to other people or businesses who need it, like someone buying a house or starting a company. These people pay the bank back with extra money (interest).
• The bank then gives you a small portion of the interest they earned as a "thank you" for letting them borrow your money. This is the interest on your savings.