Imagine you put $100 in a bank. You do nothing at all…
and next year you have more than $100.
That extra money is called interest. Let's find out how it works — and why waiting makes it grow faster and faster.
Money is a bit like a plant. Give it time, and it grows on its own.
Why does a bank give you money? 🤔
When you keep your money in a bank, the bank borrows it for a while.
It lends your money to other people — and it says thank you by paying you a little extra.
That thank-you money is interest.
Tap the jar that grows 👇
Two children each have $100. Where will the money grow?
🫙
Aisha's jar at home
Money in a jar stays exactly the same. $100 today, $100 in ten years. Nothing wrong with it — it just doesn't grow!
🏦
Ben's bank account
Yes! The bank uses Ben's money and pays him interest for letting it. Ben's $100 slowly turns into more than $100.
Tap a jar to see what happens.
New word:interest = extra money the bank adds to your savings, just for keeping it there.
Interest for one year
Banks say things like “5% a year”. The little % sign means
“out of every 100”.
5% means: for every $100 you save, the bank adds $5 after one year.
$100 saved → tap the button to wait one year
You have $100. No interest yet.
Each gold coin = $10. The green coins that appear are your interest.
The clever part: interest on interest 🌱
Here is the trick that makes savings grow faster and faster.
In year 2, the bank does not give you interest on $100 any more.
It gives you interest on $105 — your money plus last year's interest!
🔁 The Year Machine
Start: $100. Interest rate: 5% each year. Press the button to run a year.
Year
0
Interest added
$0
Total
$100.00
Press “Run a year” and watch the green tops get taller.
Notice: the interest is $5.00, then $5.25, then $5.51…
It gets bigger every single year, even though you never add a cent yourself.
That is called compound interest.
Build the money rule 🧩
Every year the bank does the same two steps. Drag (or tap) the pieces into the right order.
Next year's total =
?
+
?
money you have now
5% of the money you have now
5% of $100, always
Drag a card into a box — or tap a card, then tap a box.
The tricky trap: “5% of $100, always” is what simple interest does.
Compound interest is smarter — it always takes 5% of your new, bigger total.
The 10-year race 🏁
Two friends both save $100 at 5%. Sara gets simple interest (always $5 a year).
Kai gets compound interest. Slide to see the years fly by!
🙋♀️ Sara simple
$100
🙋♂️ Kai compound
$100
At year 0 they are exactly the same.
Your turn 🎯
Slide all the way to year 10 first. Then answer:
after 10 years, how much more does Kai have than Sara (to the nearest dollar)?
Move the slider to year 10 and compare the two numbers.
Time is the real superpower ⏰
Compound interest starts slowly, then speeds up. The longer you leave money alone, the bigger the jump.
$100 at 5%, left completely alone:
After…
You have
Interest earned
1 year
$105
$5
5 years
$128
$28
10 years
$163
$63
20 years
$265
$165
From year 10 to year 20, it earns $102 — more than in the first ten years put together!
Choose wisely 🧠
Two boxes. Tap the one you think is worth more after 15 years.
🌰
$50 saved for 15 years
Correct! At 5%, $50 grows to about $104. Fifteen years of compounding beat a bigger start with almost no time.
💵
$90 saved for 2 years
Close, but no — $90 for 2 years only reaches about $99. Starting early beats starting big!
Which one wins? Give it a tap.
Golden rule: start early, and don't touch it. Time does the hard work for you.
🏆
Well done, super saver!
You now understand something many grown-ups find tricky.
Interest = extra money the bank adds for keeping your savings there.
5% a year means $5 added for every $100 saved.
Compound interest = you earn interest on your savings and on the interest you already earned.
Simple interest always pays the same amount; compound keeps speeding up.
The two magic ingredients are time and patience. Start early, leave it alone.
Try this at home 🏠
Ask a grown-up what interest rate their savings account pays.
Then work out: if you saved $20 of your ang bao money, how much would the bank add in one year?