function calculatePeriodicRate() {
var aprInput = document.getElementById('inputApr');
var errorDisplay = document.getElementById('errorDisplay');
var resultBox = document.getElementById('resultOutput');
var apr = parseFloat(aprInput.value);
// Validation
if (isNaN(apr) || apr < 0) {
errorDisplay.style.display = 'block';
resultBox.style.display = 'none';
return;
}
errorDisplay.style.display = 'none';
resultBox.style.display = 'block';
// Calculations
// Monthly Periodic Rate = APR / 12
var monthlyRate = apr / 12;
// Decimal form (for use in math formulas)
var decimalRate = monthlyRate / 100;
// Daily Periodic Rate (Standard 365 days)
var dailyRate = apr / 365;
// Effective Annual Rate (EAR) = (1 + monthly_decimal)^12 – 1
var ear = (Math.pow((1 + decimalRate), 12) – 1) * 100;
// Display Results
document.getElementById('monthlyRateResult').innerHTML = monthlyRate.toFixed(4) + '%';
document.getElementById('decimalResult').innerHTML = decimalRate.toFixed(6);
document.getElementById('dailyRateResult').innerHTML = dailyRate.toFixed(5) + '%';
document.getElementById('earResult').innerHTML = ear.toFixed(2) + '%';
}
Understanding the Monthly Periodic Rate
The Monthly Periodic Rate is a critical financial metric used primarily by credit card issuers and lenders to determine how much interest is charged to an account during a single billing cycle. While the Annual Percentage Rate (APR) provides a yearly view of the cost of borrowing, the periodic rate breaks this down into the actual timeframe used for billing (usually one month).
Why Is This Calculation Important?
Most credit card statements show your APR, but they calculate interest based on your average daily balance multiplied by a periodic rate. Understanding how to convert your APR to a monthly periodic rate helps you verify the interest charges on your statement and better understand the true cost of carrying a balance.
The math behind the monthly periodic rate is straightforward. Since there are 12 months in a year, the annual rate is divided by 12 to find the rate applicable to a single month.
For example, if you have a credit card with an APR of 18%:
Step 1: Identify the APR (18).
Step 2: Divide by the number of periods in a year (12).
Calculation: 18 ÷ 12 = 1.5.
Result: Your monthly periodic rate is 1.5%.
Decimal vs. Percentage
When performing manual calculations to audit your interest charges, you typically need to convert the percentage into a decimal. In the calculator above, we provide the "Decimal Form" for this purpose.
Using the 1.5% example above:
1.5% = 0.015 (Decimal)
If you had a balance of 1,000 units of currency, the interest for that month would be calculated as 1,000 × 0.015 = 15.
Monthly Rate vs. Effective Annual Rate (EAR)
The calculator also outputs the Effective Annual Rate (EAR). While APR assumes simple interest, EAR accounts for compounding. If you carry a balance month after month, the interest is added to your principal, and future interest is calculated on that new, higher amount. This means the actual rate you pay over a year (EAR) is often slightly higher than the stated APR.