Interest Rate Converter
Convert rates between daily, monthly, and annual. Compare simple and compound interest.
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What is Interest Conversion?
Interest conversion is the process of transforming a rate from one period to another (for example, from monthly to annual) while maintaining financial equivalence.
It's essential for comparing investments and financing that present rates in different periods.
Why Convert Interest Rates?
Why Convert Interest Rates?
Imagine comparing two investments: Investment A: 0.8% per month vs Investment B: 10% per year. Which is better? Impossible to know without converting to the same period!
Converting to annual with compound interest: Investment A: 10.03% per year vs Investment B: 10% per year. Now yes: Investment A is slightly better!
Difference between Simple and Compound Interest
Simple Interest
- •Linear conversion (multiplication/division)
- •Monthly rate × 12 = annual rate
- •Simpler, but less accurate
- •Rarely used in practice
Compound Interest
- •Exponential conversion
- •Considers interest capitalization
- •More complex, but more accurate
- •Used in most investments
Example: 1% per month
Simple: 1% × 12 = 12% per year
Compound: (1.01)^12 - 1 = 12.68% per year
0.68% difference!
How to Use the Calculator
- 1
Enter the rate you have (e.g., 0.8% per month)
- 2
Select the period of the entered rate (daily, monthly, or annual)
- 3
Choose the interest type: Compound for investments/financing (most common), or Simple for specific contracts
- 4
Click Convert to see equivalent rates in all periods!
Practical Examples
Fixed Income Investment
Rate: 0.8% per month (compound) • Daily: ≈0.0266% per day • Annual: ≈10.03% per year
$10,000 earns $1,003 in one year
Vehicle Financing
Rate: 1.99% per month (compound) • Daily: ≈0.0661% per day • Annual: ≈26.68% per year
Annual rate is very high!
Overdraft
Rate: 8% per month (compound) • Daily: ≈0.259% per day • Annual: ≈151.82% per year!
Extremely high cost!
When to Use This Calculator?
Compare investments with rates in different periods
Understand the real cost of financing and loans
Evaluate credit cards (usually present monthly rate)
Analyze investment funds (monthly vs annual returns)
Plan investments with contributions at different frequencies
Negotiate rates with banks and financial institutions
Important Tips
Use compound interest: It's the financial market standard
Pay attention to terms: Banks disclose monthly rates (seem smaller)
Compare apples to apples: Convert all rates to the same period
Beware of overdraft: 6-8% per month becomes over 100% per year!
CDs and tax-free bonds: Usually present annual rate
Credit cards: Monthly rate of 10-15% = 214-435% per year
Frequently Asked Questions
Why isn't compound interest conversion a simple multiplication?
Because in compound interest there's the effect of "interest on interest". Capitalization makes growth exponential, not linear.
Which type of conversion should I use?
When in doubt, use compound interest. It's the standard in 95% of cases (investments, bank loans, financing).
Do banks use 30 or 31 days per month?
The commercial standard is 30 days per month and 365 days per year. Our calculator uses 30/365 (most common in the market).
Why isn't the annual rate the monthly × 12?
This only applies to simple interest. For compound, it's (1 + monthly_rate)^12 - 1 due to capitalization.
How do I know if an investment uses simple or compound interest?
Read the contract or prospectus. If not specified, assume compound (it's most common).
Is 1% per month a lot?
Depends on context. For investment: it's great (12.68% per year). For loan: it's reasonable. Always compare with alternatives.
Can I use this calculator for loans?
Yes! The formulas are the same. A converted loan rate shows the real effective cost.
Does the calculator consider business days?
No. We use the commercial standard (30 days/month, 365 days/year). For precise calculations with business days, consult your financial institution.
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