# How do i calculate the interest rate?

Using the interest rate formula, we obtain the interest rate, which is the percentage of the principal amount charged by the lender or bank to the borrower for the use of their assets or money over a specific period of time. P %3D Main amount (the starting balance).

Using the interest rate formula, we obtain the interest rate, which is the percentage of the principal amount charged by the lender or bank to the borrower for the use of their assets or money over a specific period of time. P %3D Main amount (the starting balance). Are you wondering how to calculate interest on savings? Nowadays there are many online calculators that do the calculations for you. However, learning to understand numbers can help you understand the details of why you earn as much (or as little) as you win.

But before using your calculator, it can be useful to understand the two different types of interest and how they can make you money. While it may seem like a couple of cents now, interest can accrue over time. Those cents turn into dollars, then into tens of dollars, and well, you keep the rest. Whether you're a strict saver who doesn't spend a penny of your savings or a planner who likes to save for specific life events or goals, figuring out how to calculate the monthly interest on a savings account starts with a basic understanding of simple, compound interest.

Simple interest is the money earned on the principal, or the original amount of money deposited. 1 It does not take into account interest accrued over time. Most interest-bearing accounts use compound interest formulas: 1 Compound interest is calculated using the principal balance plus interest accrued over time, 2 When interest is capitalized depends on the bank and the account. Interest can be capitalized on a daily, monthly, quarterly, or yearly basis.

3 If you're looking for faster ways to save, other savings instruments, such as money market accounts (MMA) and certificates of deposit (CD), may be more suitable for you. Learning to calculate interest earned on savings is a process. However, if you better understand how interest works, managing your money may be easier. This site is for educational purposes.

The material provided on this site is not intended to provide legal, financial or investment advice or to indicate the availability or suitability of any Capital One product or service based on your particular circumstances. For specific advice on your particular circumstances, you can consult a qualified professional. Learn more about FDIC insurance coverage The interest rate calculator determines the actual interest rates on loans with fixed terms and monthly payments. For example, you can calculate interest rates in situations where car dealers only provide information about the monthly payment and the total price without including the actual car loan rate.

There are different advantages and disadvantages to each of them, but the interest rate calculator will only show the result as a fixed interest rate.

##### Gudrun Grundmanns

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