How do I find out what the interest rate is when I know how much interest is charged on a balance due?


Charles Wang, Data Scientist at Noodle Education

User avatar for Charles Wang

Depends on whether you are dealing with simple or compound interest.

The equation for simple interest is:

I = P(1 + rt)

Do the algebra: Divide both sides by the principle (P) Subtract one (1) from both sides *Divide both sides by time (t)

That gets you the interest rate, (r).

For compound interest:

I = P(1 + r)^t

Divide both sides by the principle (P) Take the t-th root of both sides *Subtract one (1) from both sides

Good luck.

Your Answer