How to Calculate Monthly Interest Rate from APR

Written by mark kennan
  • Share
  • Tweet
  • Share
  • Pin
  • Email
How to Calculate Monthly Interest Rate from APR
Some banks compound interest monthly. (bank image by Pefkos from Fotolia.com)

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.

Skill level:
Moderately Easy

Other People Are Reading

Things you need

  • Calculator

Show MoreHide

Instructions

  1. 1

    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.

  2. 2

    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.

  3. 3

    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.

Don't Miss

Filter:
  • All types
  • Articles
  • Slideshows
  • Videos
Sort:
  • Most relevant
  • Most popular
  • Most recent

No articles available

No slideshows available

No videos available

By using the eHow.co.uk site, you consent to the use of cookies. For more information, please see our Cookie policy.