APR to Monthly Rate Calculator
Convert annual percentage rate (APR) to monthly interest rate. Understand how much interest you pay each month on loans and credit cards.
Result
- APR (Annual)
- -
- Monthly Rate
- -
- Daily Rate
- -
- Effective Annual Rate (APY)
- -
- Monthly Interest on $1,000
- -
Formula & Guide
Formula
M
Monthly Rate
Monthly Rate = APR ÷ 12
Simple division for monthly equivalent
E
Effective Annual Rate
EAR = (1 + APR/12)^12 - 1
True annual rate with monthly compounding
Formula Variables
APR
Annual Percentage Rate
The stated annual interest rate (without compounding)
Monthly
Monthly Rate
Interest rate per month (APR ÷ 12)
EAR
Effective Annual Rate
True annual rate accounting for compounding (same as APY)
Example: Credit Card APR
Credit Card APR
24%
1
Calculate Monthly Rate
- Monthly Rate = APR ÷ 12
- Monthly Rate = 24% ÷ 12
2
Calculate Daily Rate
- Daily Rate = 24% ÷ 365 = 0.0657%
3
Calculate Effective Annual Rate
- EAR = (1 + 0.24/12)^12 - 1
- EAR = (1.02)^12 - 1
The true annual rate is higher than APR due to compounding
Common APR Examples
Credit Card (18% APR)
APR: 18%
Monthly Rate
1.5%
Daily Rate
0.0493%
Effective Annual Rate
19.56%
Personal Loan (12% APR)
APR: 12%
Monthly Rate
1%
Daily Rate
0.0329%
Effective Annual Rate
12.68%
Understanding APR Conversion
Simple Conversion
Divide APR by 12 for monthly rate, or by 365 for daily rate. This gives you the periodic interest rate.
Credit Card Interest
Credit cards use daily compounding on your average daily balance, making effective rates higher than APR.
APR vs APY
APR doesn't include compounding; APY does. For borrowing, focus on APR. For saving, focus on APY.
Compare Fairly
When comparing loans, use APR. When comparing savings accounts, use APY for true comparison.
Important Notes
- Monthly rate = APR ÷ 12. This is the simplest and most common conversion.
- Credit cards often compound daily, resulting in an effective rate higher than the stated APR.
- APY (Annual Percentage Yield) is always equal to or higher than APR when any compounding occurs.
- When comparing loan offers, always compare APRs. Lenders are required to disclose APR by law.
Frequently Asked Questions
Common questions about APR and monthly rate conversion.