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Converting an Annual Interest Rate to a Monthly Interest Rate

 

This is the math needed to calculate the interest rate you get on a savings account per month when you know the interest rate per year.

 

A savings account earns an annual rate of 3.95%. What is the monthly interest rate?

 

  1. Convert the Percentage to a Decimal

    To convert a number into a decimal, take the number without the percent sign and divide by 100.




  2. Change to a Monthly Rate
    Take the answer (.0395) and divide by 12 (the number of months).




  3. Convert Back to a Percent
    Take the monthly rate and multiple by 100.



  4. Answer
    Your interest rate per month is .33%.

 

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