Interest Rate Calculator
Find the annual growth rate that turned a starting amount into an ending amount.
Try an example
7.177%
About this calculator
What Is an Interest Rate?
An interest rate is the price of borrowing money, expressed as a percentage of the amount borrowed per period, usually a year. At an 8% annual rate, borrowing $100 for a year means repaying $108. The same idea works in reverse for savers: a bank pays you interest for using your deposits. Interest rates are at the center of nearly every loan, mortgage, credit card and savings product, and central banks adjust them to steer the economy.
Finding the Rate Hidden in a Payment
Dealers and sellers often quote only a price and a monthly payment, leaving the actual interest rate out. This interest rate calculator works backward: enter the loan amount, the monthly payment and the number of payments, and it finds the annual rate you are really paying, along with the total interest. For example, a $32,000 loan repaid with 36 payments of $960 works out to about 5.07% a year — and $2,560 of interest in total. Knowing the rate lets you compare the offer fairly with a bank loan.
Worked Example
An investment that grew from $10,000 to $20,000 over 10 years earned an annual growth rate of 7.18% — not the 10% a quick "doubled in 10 years" guess might suggest, because compounding means a slightly lower annual rate still doubles the total given enough time.
Why Rates Differ
- Credit score: borrowers with a strong history are charged less.
- Loan term: longer terms often carry higher rates.
- Secured vs. unsecured: loans backed by collateral are cheaper.
- Market conditions: central bank policy, inflation and demand for credit move rates for everyone.
- Lender and loan type: credit unions, banks and online lenders all price differently.
Interest Rate vs. APR vs. APY
The interest rate is the basic cost of borrowing. The APR adds certain fees to give a fuller cost of a loan. The APY is used for savings and shows the effect of compounding on money you earn. When comparing loans, use APR; when comparing savings accounts, use APY.
Simple vs. Compound Interest
Simple interest is charged only on the principal. Compound interest is charged on the principal plus previously added interest, so it grows faster. Explore both with the Simple Interest Calculator and the Compound Interest Calculator, and turn the rate into a payment with the Loan Calculator.
Worked example
$10,000 that grew to $20,000 over 10 years implies an annual growth rate of (20,000 ÷ 10,000)^(1/10) − 1 ≈ 7.18% — the constant compound rate that would produce the same result.
Frequently asked questions
Does this assume compounding?
Yes — it solves for the single annual rate that, compounded once a year, turns the starting amount into the ending amount over the given time.
Can I use this for an investment's average annual return?
Yes, this is the standard way to compute a compound annual growth rate (CAGR) from a starting and ending value.
What if the ending amount is less than the starting amount?
The calculator still works — it returns a negative rate, representing a loss over the period.
