I had thought calculating the interest you would earn on a savings account would work like this: Let's say you open a savings account that contains 2,000 and you earn 1% interest on the money monthly. What I had thought would happen is this, by the month's end you would have earned $20.00 in interest since 1% of 2,000 is $20.00. At the beginning of the next month, your balance would rise to 2,020 as a result, and so that month you would earn $20.20 in interest since 1% of 2,020 is $20.20, which would bring the balance the following month to 2,040.20 and so on. Is my understanding correct?