🎯 Goal: Understand why bank savings grow over time.
You understand interest rate is the reward a bank pays when you deposit, so "money makes money". The longer it sits, the more interest earns interest.
Let’s explore
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When you deposit money, the bank pays you a little extra called interest. That rate is the interest rate.
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Example at 6%/year: deposit 100,000d, after 1 year you gain 6,000d.
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The longer it sits, the more the interest earns its own interest — the power of time.
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1-year interest formula: Interest = Principal × Rate. 6%/year means every 100 earns 6. Deposit 100,000d → 100,000 × 6 ÷ 100 = 6,000d after 1 year. Total 106,000d.
Practice activity
🎮 Open the “Compound machine” game to watch money grow year by year!
Worked example: You deposit 100,000d at 6%/year. After 1 year you compute: 100,000 × 6% = 6,000d. So without doing anything you have 106,000d — money makes money.
Quick quiz
1. What is interest?
→ Extra the bank pays you
2. Deposit 100,000d at 6%/year, after 1 year you gain?
→ 6,000d
3. What makes interest grow larger?
→ Leaving it longer
4. The 1-year interest formula is?
→ Principal × rate
5. Deposit 500,000d at 4%/year, 1-year interest?
→ 20,000d
6. 6%/year means every 100 earns?
→ 6
🎯 Real-life mission
Ask a parent roughly what % per year a bank savings deposit earns.