In this short article, I will show how to calculate periodic interest rate in Excel. I will show 4 methods of calculating the periodic interest rate.

Table of Contents

- 1) Calculate periodic interest rate when the interest rate is given
- 2) Periodic Interest Rate using Excel’s RATE Function
- 3) Periodic Interest Rate using Excel’s RATE Function without PMT value
- 4) Your payment is monthly but interest is compounded Semi-annually. What will be your periodic interest rate?
- Download Working File
- Related Articles

## 1) Calculate periodic interest rate when the interest rate is given

You can pay the repayments of a loan weekly, bi-weekly, semi-monthly, monthly, bi-monthly, quarterly, semi-annually, or yearly.

From the following table, you can find the periodic interest rate from yearly interest rate by dividing the yearly interest rate by total No. of Periods / Year.

Interest Compounded | Calculated After | No. of Periods / Year | Periodic Interest Rate |

Weekly | 7 days | 52 | =APR/52 |

Bi-weekly | 14 days | 26 | =APR/26 |

Semi-monthly | 15 days | 24 | =APR/24 |

Monthly | 30 days | 12 | =APR/12 |

Bi-monthly | 2 months | 6 | =APR/6 |

Quarterly | 3 months | 4 | =APR/4 |

Semi-annually | 6 months | 2 | =APR/2 |

Yearly | 12 months | 1 | =APR/1 |

## 2) Periodic Interest Rate using Excel’s RATE Function

**Syntax of Excel’s RATE Function: =RATE(nper, pmt, pv, [fv], [type], [guess])**

Say, you took a loan of $10,000 for 3 years. Your monthly payment is $332.14. What is your monthly periodic interest rate or yearly interest rate?

Loan, **pv** = $10,000

Total no. of periods for payments, **nper** = 3 years x 12 = 36

Periodic payment, **pmt** = -$332.14

**Rate (Periodic Rate) = RATE(36, -332.14, 10000) **= 1%

So, the monthly interest rate is 1%.

Then, the yearly interest rate is 1% x 12 = 12%

## 3) Periodic Interest Rate using Excel’s RATE Function without PMT value

This time, the monthly payment is not given. But the future value of your loans is given.

Loan, **pv** = $10,000

Total periods of payments, **nper** = 36

Future value, **fv** = $14,307.55

Rate (Periodic Rate) **= RATE(36, , 10000, 14307.55)** **= 1%**

As the **pmt** value is not given, we have kept a blank space for this argument in the **RATE** formula.

## 4) Your payment is monthly but interest is compounded Semi-annually. What will be your periodic interest rate?

You have to use this formula: **r = (1 + i/n)^(n/p) – 1**

Here,

**r** = Interest rate for per payment period

**i** = Annual Interest Rate (%)

**n** = number of compounding periods per year

**p** = number of payments per year

If **APR (annual interest rate)** is 12%, interest rate **(i)** is compounded semi-annually **(n = 2)**, but you have to pay monthly, then your periodic interest rate,

**r = (1 + 12%/2)^(2/12)-1 = (1+6%)^(1/6) – 1 = 0.97588%**

This is a general formula for finding the periodic interest rate.

## Download Working File

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