How to Determine an Interest Rate With a Calculator

A calculator will help you quickly figure interest rates.

The interest rate on a loan or credit is the amount the funds you borrow will cost you in the long run. The rate is usually a percentage of the principle, or amount borrowed, calculated over time. You can determine what your interest will be if you know the rate, and a calculator will speed this process considerably. It is always a good idea to keep up with your interest payments, especially if the interest you owe is compounded (added to the principle)--causing you pay a whole lot more over time.

Things You'll Need

• Calculator

Instructions

1. Determine the amount of the loan or credit extended.

2. Multiply the amount of the loan by the interest rate using the calculator. The percentage should be entered as a decimal (i.e. 5 percent is .05). If you borrow $10,000 at 5 percent interest per year, the interest is $500 annually.

3. Calculate simple interest over time by multiplying the amount of the interest for a given period by the total number of these periods in the term of the loan. For instance, if you have a $10,000 loan at 5 percent annually for five years, this would come out to $500 annually times five years, or $2,500.

Tips & Warnings

• Depending on the terms of the loan, you may be able to decrease the interest you pay by making accelerated payments, or paying back the loan more quickly.

References

• Investopedia: Interest Rate