Divide the annual interest rate by 12
Monthly interest rate = Annual interest rate ÷ 12
If the annual rate is 12%, the monthly rate is 1%
If the annual rate is 6%, the monthly rate is 0.5%
For a decimal annual rate, divide the decimal by 12
Monthly rate in decimal = Annual rate in decimal ÷ 12
To convert monthly rate to a percentage, multiply the decimal by 100
For compound interest, use the monthly rate in the formula: r = annual rate ÷ 12
For effective monthly rate from an annual effective rate, use: (1 + annual rate)^(1/12) – 1
To find monthly interest amount, multiply principal by monthly interest rate
Monthly interest = Principal × Monthly interest rate