How do you calculate interest?

To calculate interest, multiply the periodic interest rate by the principle amount. For example, if you borrowed $1000 with an interest rate of 10 percent, in a year your interest paid is $100.

1. Find your interest rate

   Find your interest rate in your financial records for the product for which you are calculating interest.

2. Multiply the interest rate by the principle amount

   For example: $1000 in principle times 0.1 (10 percent periodic interest rate) equals $100.

3. Confirm your annual rate

   Once you determine the amount of interest, check with your bank or other institution to confirm that your rate does not vary.