Budgets and borrowing
Simple interest is I = Prt on the original amount, and a monthly rate is the annual rate divided by 12.
A worked example
$800 at 5% simple interest for 2 years earns 800 x 0.05 x 2 = $80. A card charging 24% a year charges 24 ÷ 12 = 2% on one month's balance.
The mistake people actually make
Divide an annual rate by 12 before applying it to a single month, or the interest comes out twelve times too big. A small fee on a short loan can work out to a very large annual rate.