How Money Grows: Banks & Interest

Saved money can GROW — banks pay interest, and compound interest earns interest on your interest, so it snowballs over time.

📊Simple vs. Compound: Watch It Pull Ahead

Simple interest — same small step each year

Compound interest — grows faster every year

Both start with the same $100. Simple interest adds the same amount each year, but compound interest gets a little bigger every year — so over time it leaves simple interest behind.

⛄The Money Snowball: Compounding Over Time

Each year your savings earns interest — then next year you earn interest on that interest too. Like a snowball rolling downhill, it picks up more and more, so starting early and leaving it alone matter most.

🔑Key Terms

🏦Bank A safe place to keep your money. The bank pays you interest for letting it hold your savings.

💰Interest Extra money the bank pays you for saving — a reward that makes your money grow.

🪙Principal The starting amount of money you put in the bank, before any interest is added.

➕Simple Interest Interest paid only on your original principal, so you earn the same amount each year.

📈Compound Interest Interest paid on your principal AND on interest already earned — so it grows faster over time.

%Interest Rate The percent the bank uses to figure your interest — a higher rate grows your money faster.

⭐ Remember: with compound interest your money earns money on its own money — so the earlier you start saving and the longer you leave it, the bigger your snowball grows!

✏️ Future-Ready Anchor Chart · How Money Grows: Banks & Interest