A bank offers an interest rate of 5% per annum compounded annually. If you deposit $1,000, how much will you have after 3 years?

Wed, 06 May 2026 14:39:08 +0000

**Why 5% Annual Compound Interest on $1,000 Grows to Over $1,157—Here’s What You Should Know** Curious about how even a small deposit can grow with steady returns? Many Americans are exploring how banks’ 5% annual interest, compounded yearly, can turn a modest $1,000 deposit into nearly $1,157 after just three years. This growth isn’t magic—it’s the power of compound interest, a straightforward financial principle gaining attention amid shifting economic conditions and rising interest rates. Understanding how it works helps people make smarter decisions as they plan for savings, retirement, or long-term wealth. **Why This Rate Is Gaining Attention in the U.S. Market** Recent economic shifts, including rising interest rates set by the Federal Reserve, have reignited interest in bank savings products. With inflation trends prompting banks to increase annual percentage yields, a 5% annual compound rate feels tangible and reliable. Consumers are researching options that deliver clear, predictable returns—especially after years of low interest environments. This shift reflects a broader desire for financial transparency and confidence in simple, proven methods to grow savings safely.