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# How to Calculate Monthly Interest Rate from APR

Updated May 03, 2018

APR stands for annual percentage rate, which equals the periodic rate times the number of periods per year. The APR does not take into consideration the effects of interest compounding so you can easily calculate the monthly rate. You may want to calculate the monthly rate if you are leaving your money in an account for a short period or if your account compounds interest monthly.

Contact your lender or consult your account documents to determine the account APR. Use the APR rather than the APY, which stands for annual percentage yield.

Divide the APR by 12 to calculate the monthly interest rate expressed as a percentage. For example, if the APR equals 9 per cent, you would divide 9 by 12 to get 0.75 per cent for the monthly rate expressed as a percentage.

Divide the monthly interest rate expressed as a percentage by 100 to calculate the monthly interest rate expressed as a decimal. Finishing this example, you would divide 0.75 per cent by 100 to find the monthly rate expressed as a decimal to be 0.0075.

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