The interest amount earned is removed from the accumulated amount of savings because the interest is simple interest.
interest is the percentage amount earned over the savings made and deposited in the account, the interest is a basic market interest rate that is applied to the savings to calculate the amount of interest income for a given period of time.
The savings are deposited and they are applied for the interest rate the interest income is also included in the original savings, then for the next year the interest rate will again be only applied to the original savings amount and not the compounded amount that is the original amount of savings plus the interest earned in the first year.
That is why the interest earned in the first year is deducted from the total savings in the account to calculate the interest income for the second year.
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