Calculate monthly interest and future balance from APR, APY, or a monthly rate, include contributions, or solve the principal needed for a target.

Project a balance using the quoted rate convention.

USD estimate with monthly compounding at a constant rate. Fees, taxes and withdrawals are excluded; this is not a loan payment schedule.

Changing basis reinterprets the rate. A loan APR that includes fees is not necessarily its interest rate.

Monthly contributions

Blank means no contribution.

Monthly Interest Formula

For a nominal annual interest rate compounded monthly, the following formula gives one month’s interest on an unchanged balance before any beginning-of-month contribution.

MI = LB X AIR / 1200
  • Where MI is the monthly interest ($)
  • LB is the loan balance ($)
  • AIR is the annual interest rate (%)
  • 1200 is derived from 12 months multiplied by 100 (for percentage conversion)

To calculate monthly interest, multiply the loan balance by the annual interest rate, then divide by 1200.

This is a periodic-interest estimate, not a loan payment schedule. The calculator projects monthly compounding and contributions; actual daily accrual, fees, taxes and account rounding may differ. A loan APR that includes fees is not necessarily the nominal interest rate used here.

Monthly Interest Definition

Monthly interest is the interest earned or charged over a month. In this model, nominal annual rate i = AIR / 1200; for an effective APY, i = (1 + APY / 100)^(1/12) − 1; for a monthly percentage, i = rate / 100. The rate stays constant.

How to calculate monthly interest?

1. Choose Future balance or Starting principal. Enter the starting balance or target balance in USD.

2. Enter the quoted rate, select its basis and enter the whole number of months. Optional monthly contributions default to zero; choose their timing.

3. Select Calculate. Future balance uses FV = P(1+i)^n + C×A, with A = ((1+i)^n − 1)/i or n at zero rate; beginning-of-month contributions multiply A by (1+i). Inverse principal is P = (target − C×A) / (1+i)^n. A negative required principal means contributions alone exceed the target.

FAQ

What is monthly interest?
For the nominal annual rate model, first-month interest is the starting balance multiplied by AIR / 1200, including a contribution first when Beginning of each month is selected. APY and monthly rates use their selected periodic-rate conversion. Subsequent months earn compound interest on the updated balance.