Want to know what your savings or a loan balance earns or costs each month? Enter the balance and annual rate to get the first month’s interest, the monthly rate, and a month-by-month table that shows interest building on interest.
Monthly Interest Calculator
Calculate how much interest a balance earns each month.
Results are estimates for educational purposes and are not financial advice. Actual returns depend on your provider's terms, fees and taxes.
Monthly interest formula
Monthly interest = Balance × (Annual rate ÷ 12)
When interest is added each month, next month’s interest is calculated on the new, larger balance:
Balance after k months = P × (1 + r/12)k
- P
- Current balance.
- r
- Annual interest rate as a decimal.
- k
- Number of months.
How to use
- Enter the balance.
- Enter the annual interest rate.
- Choose how many months to show (1 to 600) and press Calculate.
Worked example
A savings balance of $25,000 earns 4.8% a year, compounded monthly.
- Monthly rate: 4.8% ÷ 12 = 0.4%.
- Month 1 interest: 25,000 × 0.004 = $100.00.
- Month 2 interest: 25,100 × 0.004 = $100.40.
- Month 3 interest: 25,200.40 × 0.004 = $100.80.
- After 12 months the total interest is $1,226.76 and the balance is $26,226.76 — an effective annual rate of 4.907%.
Practical uses
- Estimating monthly interest income from savings.
- Understanding how much of a loan payment goes to interest in a given month (balance × monthly rate).
- Checking the interest line on a bank statement.
Assumptions and limitations
- All months are treated as equal. Accounts that accrue interest daily will show slightly different amounts in 28-, 30- and 31-day months.
- Interest is reinvested every month. If you withdraw it, every month’s interest equals the first month’s figure.
- No deposits, withdrawals, taxes or fees.
Frequently asked questions
How do I calculate monthly interest on a loan?
Multiply the outstanding balance by the annual rate and divide by 12. On a $200,000 mortgage at 6%, the first month’s interest is $1,000.
What if my bank quotes an APY?
The monthly rate is (1 + APY)1/12 − 1, which is slightly lower than APY ÷ 12. For a 5% APY it is 0.4074% per month.
How much interest does $10,000 earn per month?
At 5% per year, about $41.67 in the first month.