Monthly Interest Rate Calculator
Convert annual rate to monthly and calculate monthly interest amount
Frequently Asked Questions
The simple (nominal) monthly rate = Annual rate ÷ 12. This is the method most credit cards, loans, and simple-interest accounts use. It's an approximation — it doesn't account for compounding, so it slightly understates the true effective monthly rate on a compounding account.
Monthly interest amount = Balance × (Annual rate ÷ 12). For example, a $10,000 balance at 6% annual interest accrues about $50 in interest that month (before any compounding).
The effective monthly rate accounts for compounding by taking the 12th root of (1 + annual rate) − 1. It's slightly higher than the simple annual÷12 rate and is the more precise figure for accounts that compound monthly.
Use the simple nominal rate (annual ÷ 12) for most everyday purposes like estimating a credit card or loan's monthly interest — it's what's printed on most statements. Use the effective monthly rate only if you need precise compound-interest math.