A bank account grows at an annual interest rate of 5%. If the initial amount is $1000, how much will be in the account after one year, compounded annually?

Mon, 20 Apr 2026 11:14:41 +0000

**Why Your Savings Compound—Even at 5% A Year** Have you ever paused to think about how even a simple bank account grows over time? With interest rates around 5% and compounding Treasury a key force, understanding your money’s potential can shift how you plan for the future. Right now, many US households are not only asking, “How much will grow,” but also rethinking how small balances can gain meaningful value through smart banking. This growing interest in long-term savings touch a broader cultural shift toward financial awareness and intentional planning—especially among younger, mobile-first users navigating everyday economic decisions. **The Steady Power of Compound Interest** When you open a bank account earning 5% annual interest, compounded yearly, the growth isn’t sudden—it’s gradual but powerful. This means every dollar earns interest, and the next year’s interest is calculated on your now-larger balance. Backed by decades of financial stability, compound interest transforms modest savings into meaningful returns over time. For a $1,000 initial deposit, the math is clear: after one year at 5% compounded annually, your balance becomes $1,050—showing a modest but genuine gain without risk or complexity.