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The Bank Account That Paid Rent on Money

5th grade nonfiction passage about savings accounts and interest: 210 words, six questions, an answer key and vocabulary.

5th grade nonfiction savings accounts and interest 210 words

The Bank Account That Paid Rent on Money

When you keep money in a savings account, the bank does not just lock it in a vault. The bank uses the money that many people save to make loans to others. In return, it pays you a small reward called interest. You can think of interest as rent that the bank pays for borrowing your money.

Interest is figured as a percent of your savings. Suppose you put $100 in an account that pays 5 percent each year. Five percent of $100 is $5, so after one year you would have $105. You did nothing but wait.

Here is the exciting part. Many accounts add the interest to your balance, and then the next year's interest is figured on the bigger amount. In the second year, 5 percent of $105 is $5.25. That is a little more than the first year. The extra grows slowly at first, but over many years it adds up. This is called compound interest.

Real banks change their rates from time to time, so the 5 percent here is only an example. A higher rate gives you more, and a lower rate gives you less. Still, the lesson holds. The longer money stays in the account, the more time it has to earn. Starting early gives your savings the most time to grow.

Questions

  1. What does a bank do with the money that people save? in the text

  2. What is interest? in the text

  3. How much would $100 become after one year at 5 percent? in the text

  4. How much interest is earned in the second year in the example? in the text

  5. Why is the second year's interest a little bigger than the first year's? think about it

  6. Why does starting to save early help the most? think about it

Words to know

interest
money a bank pays you for keeping your savings there
vault
a strong room or box where money is kept safe
balance
the amount of money in an account
borrow
to take something and promise to give it back
compound
to build up by adding more to what is already there
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One passage, three levels

The same topic and facts written three ways, so a mixed class can read and talk about one text. Each group’s sheet shows only a shape; the key says which is which.

● Easier · 191 words · Flesch-Kincaid grade 2.5

When you keep money in a savings account, the bank does not lock it away. The bank uses the money people save to make loans to others. In return, it pays you a small reward called interest. Think of interest as rent. The bank pays it to borrow your money.

Interest is a percent of your savings. Say you put $100 in an account. It pays 5 percent each year. Five percent of $100 is $5. After one year, you would have $105. You just had to wait.

Here is the good part. Many accounts add the interest to your balance. Then next year the interest is figured on the bigger amount. In year two, 5 percent of $105 is $5.25. That is a little more than year one. The extra grows slowly at first. Over many years it adds up. This is called compound interest.

Real banks change their rates. The 5 percent here is only an example. A higher rate gives you more. A lower rate gives you less. But the lesson holds. The longer money stays in the account, the more time it has to earn. Start early to give your savings the most time to grow.

▲ This passage · 210 words · Flesch-Kincaid grade 4.1

When you keep money in a savings account, the bank does not just lock it in a vault. The bank uses the money that many people save to make loans to others. In return, it pays you a small reward called interest. You can think of interest as rent that the bank pays for borrowing your money.

Interest is figured as a percent of your savings. Suppose you put $100 in an account that pays 5 percent each year. Five percent of $100 is $5, so after one year you would have $105. You did nothing but wait.

Here is the exciting part. Many accounts add the interest to your balance, and then the next year's interest is figured on the bigger amount. In the second year, 5 percent of $105 is $5.25. That is a little more than the first year. The extra grows slowly at first, but over many years it adds up. This is called compound interest.

Real banks change their rates from time to time, so the 5 percent here is only an example. A higher rate gives you more, and a lower rate gives you less. Still, the lesson holds. The longer money stays in the account, the more time it has to earn. Starting early gives your savings the most time to grow.

■ Harder · 228 words · Flesch-Kincaid grade 6.9

When you deposit money in a savings account, the bank does not simply lock it away in a vault. Instead, the bank uses the money that many customers save in order to make loans to other people. In return, it pays you a small reward called interest. You can think of interest as rent that the bank pays for the privilege of borrowing your money.

Interest is calculated as a percent of your savings. Suppose you place $100 in an account that pays 5 percent each year. Five percent of $100 is $5, so after one year you would have $105, and all you had to do was wait.

Here is the remarkable part. Many accounts add the interest to your balance, and then the following year's interest is figured on the larger amount. In the second year, 5 percent of $105 comes to $5.25, which is slightly more than the first year. The additional growth is modest at first, but over many years it accumulates considerably. This process is called compound interest.

Real banks adjust their rates from time to time, so the 5 percent mentioned here is only an example. A higher rate earns you more, and a lower rate earns you less. Nevertheless, the lesson remains the same. The longer your money stays in the account, the more time it has to earn, and starting early gives your savings the greatest opportunity to grow.

Download as one PDF

How to use it

  1. Press Read it big (or B) to put the text on the projector, or Full screen (F) to fill the whole screen.
  2. Ask the questions one at a time and use Show answer when the class has decided. A shows or hides every answer.
  3. Print student copy for the class, or Print with answers for yourself.

Ideas for class

  • Before reading, put interest, vault, balance, borrow and compound on the board with their meanings from the Words to know section and have students predict what the text will be about.
  • Read it aloud once while students follow along, then have them reread it alone or with a partner. At a calm 100 words a minute it takes about 2 minutes to read aloud.
  • Use the Read it big button (or B) to put the text on the projector, and Show answer on one question at a time so the class commits to an answer first.
  • Question 5 asks the reader to infer. Ask students to point to the words in the passage that led them to their answer.
  • Ask students to write one question the passage did not answer, then look for the answer in a book or on a classroom screen.
  • Print the student copy for independent work and keep the answer-key copy for yourself.

Related

Questions

What reading level is "The Bank Account That Paid Rent on Money"?

It was written for 5th grade. It has 210 words and works out to a Flesch-Kincaid grade level of about 4.1. That is a formula's estimate from sentence length and syllables, and it is not a Lexile or a guided reading level, so check it against your students.

What do the questions ask?

There are six. 4 ask for something the text says directly and 2 ask the reader to work something out from clues. Each has an answer in the key, and the answers are written as a teacher would accept them, not as the only possible wording.

How long does it take to read?

About 2 minutes read aloud at 100 words a minute. For a one-minute fluency check, paste it into the fluency timer and use the word count.

Can I print it?

Yes. Print student copy gives the passage, the questions with lines to write on, and the word meanings. Print with answers gives the same page with the answers filled in. Both are made in your browser.

Is this passage from a published book?

No. It was written for Peabody Teach, so there is no book to buy and no login to read it.

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