What is 7% interest every year?

Imagine you have 10 cookies, and every year, someone gives you 7 more cookies because they like how many you have. That’s what 7% interest every year means, it’s getting 7 extra of whatever you have, just for keeping it safe.

Let’s say you start with 10 cookies, and every year, someone gives you 7 more cookies because they like how many you have. That’s what 7% interest every year means, it’s getting 7 extra of whatever you have, just for keeping it safe.

If you had 20 cookies, then you’d get 14 extra cookies next year (because 7 is 1/10th of 20). So the more you have, the more you get each year, like a cookie bonus that grows over time!

Now imagine instead of cookies, you had $100 in your piggy bank, and every year, someone gives you $7 just for keeping your money safe. That’s 7% interest, it's like getting a little extra cash each year because you were smart enough to save it!