How to Convert an Annual Interest Rate to a Monthly Interest Rate

The monthly interest rate on an account is one-twelfth of the annual percentage rate (APR) shown on your bank statement, so computing the former is a simple matter of dividing the annual rate by 12. What may trip you up, however, is trying to use that number in other computations related to your account, such as calculating an actual interest amount. This, too, is a fairly straightforward bit of math.

Locate the interest rate you plan to convert. This will be on the mortgage or consumer credit statement you are analyzing and is labeled "annual percentage rate," or APR.

Divide that figure by 12 months. For example, with an APR of 7.5 percent: 7.5 percent divided by 12 gives a monthly interest rate of .63 percent.

Divide by 100 to convert the monthly interest rate to a decimal for use in standard computations. In our example, .63 divided by 100 is .0063.


  • This computation is exactly the same for computing weekly or daily interest. Just divide the APR by the number of time units in a year. For instance, 52 for weekly interest rate or 365 for the daily rate.

About the Author

Billie Jo Jannen is a politics and lifestyle columnist in rural San Diego County and a senior copy editor for Demand Media. Her writing and editing career spans 23 years, and she specializes in border and environmental affairs. Jannen's eclectic education includes engineering and horticulture, and she represents the Rural Economic Action League in regional economic development planning.