The big ideaA lender is paid a little extra for waiting, called interest.
How it works
Ana needed 10 pretend coins for reeds. Lena the lender could not use her coins while Ana had them, so she waited.
Lena asked one extra coin for each week of waiting. After one week Ana paid back 10 + 1 = 11 coins.
The extra is called interest. It is the price of borrowing, because the lender is paid for waiting.
A good lender says the extra before the borrowing starts, so nobody is surprised.
A longer wait means more extra.More back, or the same?
Example 1: One week
Ana borrows 10 coins for 1 week.
The extra is 1 coin.
10 + 1 = 11
She pays back 11 coins.
Example 2: Two weeks
Lena asks 1 extra coin for each week.
Two weeks is 2 extra coins.
10 + 2 = 12
Ana pays back 12 coins.
Example 3: Find the interest
Ana borrowed 10 coins and paid back 12.
12 − 10 = 2
The interest is 2 coins.
Example 4: Three weeks
Three weeks is 3 extra coins.
10 + 3 = 13
A longer wait costs more, so 3 weeks costs more than 1 week.
Words to know
lender
Someone who lets others borrow their coins.
interest
The extra coins paid to a lender for waiting.
borrower
The person who takes the coins and pays them back.
price of borrowing
Another way to say interest.
Watch out
The interest is only the extra coins, 2 of the 12, not the whole 12.
A longer wait means more extra. Three weeks costs more than one week.
A borrowed pencil or a library book comes back as it was, with nothing extra.
A lender should say the extra before the borrowing starts.
Try it
Ana borrows 10 coins for 1 week. How many does she pay back?
Ten coins borrowed and twelve paid back. What is the extra?
Ana borrows 10 coins for 4 weeks. How many does she pay back?
Answers: 1. 11 coins · 2. 2 coins · 3. 14 coins
Try at homeWith a grown-up, talk about why someone who lends might ask for a little extra, and why a good lender says the price first.
For grown-upsThese are pretend coins. Talk about why someone who lends might ask for a little extra, and why a good lender says the price first. Tutorpip never pays interest on your child's real credits; this episode is about a story lender only.
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