Convert monthly interest rate to annual interest rate

Monthly to yearly interest rate converter. Convert a monthly interest rate to annual interest rate easily with our calculator.

If you are looking to convert a monthly interest rate to a yearly rate, be sure to use our annual to monthly interest rate converter calculator.

How does the monthly to annual interest rate converter work?

The calculator is very simple to use. It is assumed that you have come this far interested in converting a monthly interest rate to an annual interest rate. To convert, simply fill in the monthly interest rate in the first field and click “Calculate”. Then you will receive the result with the equivalent annual interest rate that you filled in.

How the monthly to annual interest rate conversion works

It is very important that you know how to calculate the conversion from monthly to annual fees, since you may be faced with this calculation when evaluating a property financing, calculating the yield of an investment, loans, among others. Therefore, we will explain how the calculation behind the calculator works so that you understand how it is done.

The calculation for converting monthly interest rates to annual interest rates is done based on the following formula:

1 + ia = (1 + ip)^n

ia = annual interest rate
ip = interest rate for the period that you have
^ = means “raised to”
n = conversion periods

Example: Converting Monthly Interest Rates into Annual Interest Rates

To make it clearer, here is an example of converting the rate of 0.5% per month to the equivalent annual rate. Substituting the values into the formula will give you the following equation:

ia = is what we want to find;

ip = 0,5%

n = 12 months

That being the case,

1 + ia = (1+0,005)^12

1 + ia = 1,06167

ia = 1,06167 – 1

ia = 0.06167 or 6.167% per year