## Did you know?

We also have Bitesize study guides covering many subjects at National 4 and National 5 on our Knowledge & Learning BETA website.

Home > Maths I > Numbers and Money > Interest

Maths I

Interest

Back

In this section you will revise: simple interest, simple interest over multiple years, simple interest over a fraction of a year.

# Simple interest

If you put money into a bank or building society they will pay you interest on this money.

If you have borrowed money, from a bank or building society for a mortgage or other loan, you have to pay them interest.

Simple interest is calculated on a yearly basis (annually) and depends on the interest rate. The rate is often given per annum (p.a.) which means per year.

Take a look at the Percentage revision bite if you need to brush up on percentages.

## Example

Sally deposits £600 into an account with an interest rate of 5% per annum.

Calculate the interest that Sally receives in one year and find how much money she has in the account after one year.

Interest = 5% of £600

=

= £30

New balance = £600 + £30

= £630

After one year Sally will have £630.

### Now try this question:

Question

Jamie's bank account pays interest at a rate of 4.3% per year. If he puts £850 into his account, how much will Jamie have after a year?

Interest = 4.3% of £850

= of £850

= £36.55

New balance = £850 + £36.55

= £886.55

The final balance after a year will be £886.55

Back

BBC iD