Knowing how to convert percentages to decimals and back again is a valuable math skill and is certainly helpful for understanding your finances. Whether you’re making quick estimates in your head, using a calculator, or modeling your car loan on a spreadsheet, you need to know how decimals and percentages are related.
Divide by 100
Most interest rates are quoted and advertised in terms of a percentage. But if you want to run calculations using those numbers, you’ll need to convert them todecimal format. The simplest way to do that is to divide the number by 100.
Example: To convert 75% to decimal format, divide 75 by 100.
75 ÷ 100 = .75
Search engines such as Google and Bing also make it easy to do quick calculations online, or you can also fire up your favorite calculator app if you prefer. To calculate with a search engine, type the expression you’re trying to solve into the search field. For example, type in “75/100.”
Move the Decimal Point to the Left
Another simple way to convert a quoted percentage to decimal format is to move the decimal two places to the left.
Note
If you don’tactually seea decimal, just imagine that it’s at theend,or far right side, of the number. Imagine that the decimal is followed by two zeroes if that helps (so 75 is 75.00).
Example:To convert 75% to decimal format, move the decimal point before the 7.
75% = .75
After you do this several times, it will become natural, and you’ll be able to do it instantly in your head.
With more complex numbers, you’ll still just move the decimal over two places. Here are a few more examples:
- 100% = 1
- 150% = 1.5
- 75.435% = .75435
- .5% = .005
Example: APY Earnings
Assume your bank pays a 1.25% annual percentage yield (APY) on your savings account. How much will you earn over one year if you deposit $100?
To find out, convert the interest rate to decimal format and multiply the result by the amount of your deposit.
1.25 ÷100 = .0125
.125 * $100 = $1.25
You'll earn $1.25 per year for every $100 that you deposit.
Note
Use an asterisk (or * symbol) to multiply numbers when using a spreadsheet or search engine.
Example: Purchase Discounts
Let's say you want to buy an item that normally costs $45, and it's on sale at 30% off. How much would you save, and how much would it cost on sale?
30 ÷100 = .30
.30 * $45 = $13.50 (savings)
45 – $13.50 = $31.50 (sale price)
You would pay $31.50 and save $13.50 on the item.
Converting Decimals to Percentages
What if you want to go the other way and convert a number from decimal to percentage format? As you might have guessed, just do the opposite of what you did above.
Multiply by 100
An easy approach is to multiply a number in decimal format by 100.
Example:To convert .75 to a percentage, multiply it by 100.
0.75 * 100 = 100%
Move the Decimal Point to the Right
Another way to convert from decimal to percentage format is to move the decimal point two places to the right.
Example:To convert .75 to a percentage, move the decimal point to after the 5.
.75 = 75%
The Big Picture
For better or worse, sometimes financial calculations like this only give you a rough idea of how much you’ll spend or earn, although that estimate is still useful for making quick, big-picture evaluations.
Converting a percentage to a decimal using the methods above is accurate, but it's important to know what to do with that numberafteryou’ve converted it. The next example shows how simple calculations with dollar amounts can lead you astray.
Assume you’ll borrow $100,000 to purchase a home with a 30-year mortgage, and the interest rate is 6% per year. How much will you spend on interest each year?
To get a rough, but not the exact answer, convert the interest rate to decimal format and multiply the result by the amount you borrow:
6 ÷100 = 0.06
0.06 * $100,000 = $6,000
However, you won’t spendexactly$6,000 per year on interest unless you use aninterest-only loan. The real answer for most fixed-rate home loans would be more like $5,966.59 for the first year.
With standard home and auto loans, you usually pay down the debt over time using level monthly payments. With each payment, a portion of the payment reduces your loan balance, and the remaining portion covers your interest cost.
As you’re paying down the loan balance, there will only be a brief period, just the first month, when you owe the full $100,000. After that, you’ll owe less each month, and your interest costs will decrease accordingly. That process is calledamortization.
Note
If you want to calculate your exact interest payments on a loan, you can learn how to build an amortization table.
Frequently Asked Questions (FAQs)
How do you change a fraction to a percent?
To change a fraction to a percent, you first have to convert the fraction to a decimal by dividing the top number by the bottom number. From there, move the decimal two numbers to the right and make it a percent. For example, 3/4 becomes 3 ÷ 4 = 0.75 or 75%.
How do you round a decimal to the nearest tenth of a percent?
A tenth of a percent in decimal form is 0.001. If you have a figure that has more than three numbers after the decimal, you round it by looking at the fourth number (a hundredth of a percent). If that number is five or more, then you round the tenth of a percent up. If the number is four or less, then you round down and keep the tenth of a percent as it is. For example, 0.0015 would become 0.002, but 0.0014 would become 0.001.
