A bank offers 5% annual interest compounded annually. If $1,000 is deposited, what will be the balance after 4 years?

Fri, 01 May 2026 23:56:42 +0000

**How A Bank’s 5% Annual Interest Compounded Annually Transforms $1,000 Over 4 Years** Could $1,000 grow to nearly $1,169 after just 4 years with a 5% annual interest rate—compounded annually? For many Americans exploring savings options, this question reflects growing interest in steady, reliable returns. While not a premium return, this rate offers predictability amid economic shifts, making it a thoughtful choice for long-term planning. A bank offering 5% annual interest compounded annually applies interest each year on the initial deposit plus any accumulated gains. Unlike simple interest, compounding magnifies growth over time, turning modest sums into meaningful balances—especially when sustained over multiple years. **Why 5% Annual Interest Compounded Annually Is Gaining Attention in the U.S.**