How to Calculate Monthly Interest on a CD
Certificates of Deposit are bank accounts that require you to leave the money in the account for a predetermined time period. In exchange for this guarantee, the bank pays a higher interest rate. Instead of adding the interest directly to the account, some CDs pay the interest directly to the account holder, making the CD a fixed income investment. In order to determine how much money you will earn in interest each month, you need to know the CD's balance and the annual interest rate.
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Instructions
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Divide the annual interest rate by 100 to convert to a decimal from a percentage. For example, if your annual interest rate equals 3.42 percent, divide 3.42 by 100 to get 0.0342.
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Divide the annual interest rate by 12 to convert to a monthly interest rate. In this example, divide 0.0342 by 12 to get a monthly rate of 0.00285.
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Multiply the monthly rate by the balance of your CD to find the amount of monthly interest earned. In this example, if you had $3,510 in the CD, multiply $3,510 by 0.00285 -- your monthly interest is $10.
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