# How to Calculate Interest Rate in Simple Steps

How to Calculate Interest Rate in Simple Steps : If you want to know about Calculate Interest Rate online so this article is very important for you. In this article, we will discuss How to Calculate Interest Rate Online, How to Calculate Interest Rate in Simple Steps online, I will explain each and every topic covers in details so read whole article.

Calculating interest rate is not at all a difficult method to understand. Knowing to calculate interest rate can solve a lot of wages problems and save money while taking investment decisions. There is an easy formula to calculate simple interest rates. If you are aware of your loan and interest amount you can pay, you can do the largest interest rate calculation for yourself.

Using the simple interest calculation formula, you can also see your interest payments in a year and calculate your annual percentage rate. Here is the step by step guide to calculate the interest rate.

### How to calculate interest rate

Step 1: To calculate your interest rate, you need to know the interest formula I/Pt = r to get your rate. Here,

I = Interest amount paid in a specific time period (month, year etc.)

= Principle amount (the money before interest)

t = Time period involved

r = Interestratein decimal

You should remember this equation to calculate your basic interest rate.

See also  Differences between debt funds and FD – Which is better?

Step 2: Once you put all the values required to calculate your interest rate, you will get your interest rate in decimal. Now, you need to convert the interest rate you got by multiplying it by 100. For example, a decimal like .11 will not help much while figuring out your interest rate. So, if you want to find your interest rate for .11, you have to multiply .11 with 100 (.11 x 100).

For this case, your interest rate will be (.11 x 100 = 11) 11%.

Step 3: Apart from this, you can also calculate your time period involved, principal amount and interest amount paid in a specific time period if you have other inputs available with you.

Calculate interest amount paid in a specific time period, I = Prt.

Calculate the principal amount, P = I/rt.

Calculate time period involved t = I/Pr.

Step 4: Most importantly, you have to make sure that your time period and interest rate are following the same parameter.

For example, on a loan, you want to find your monthly interest rate after one year. In this case, if you put t = 1, you will get the final interest rate as the interest rate per year. Whereas, if you want the monthly interest rate, you have to put the correct amount of time elapsed. Here, you can consider the time period like 12 months.

Please remember, your time period should be the same time amount as the interest paid. For example, if you’re calculating a year’s monthly interest payments then, it can be considered you’ve made 12 payments.