Interactive infographic
How Interest Rates Change Your Loan Payment
Move the sliders to see how a one-point change in the interest rate changes your monthly payment and the total interest on a loan.
What this infographic shows
The interest rate decides how much a loan really costs. The monthly payment covers two things: part of the money you borrowed, and interest on whatever you still owe. A higher rate makes the interest part bigger every single month.
Each bar compares the same loan at five rates, two points below and two points above the rate you pick:
- Indigo: the money you borrowed. It is the same on every bar.
- Amber: the interest you pay on top. It grows quickly as the rate rises.
How to use it
- Set the loan amount. $300,000 is close to a typical U.S. mortgage.
- Pick a yearly interest rate.
- Change the loan length. Compare 30 years with 15 years and watch the amber part shrink.
Why rates are in the news
In September 2026 the Federal Reserve raised its policy rate to 3.75%–4.00% to fight inflation. Banks set many loan and card rates from that benchmark, so a Fed move reaches your payments within weeks. Read the guide to how interest rates work for the full chain, or see how inflation shrinks your money.
This is an educational illustration, not financial advice. Real loans include fees, taxes and insurance.
Frequently asked questions
How much does a 1% higher interest rate add to a loan payment?
It depends on the size and length of the loan. On a $300,000, 30-year fixed loan, moving from 6.5% to 7.5% raises the monthly payment from about $1,896 to about $2,098, roughly $201 more a month.
Why is so much of a long loan's cost interest?
Interest is charged every month on the balance you still owe. On a long loan the balance falls slowly, so you pay interest on a large amount for many years.
Does a Fed rate hike change my existing fixed-rate loan?
No. A fixed rate stays the same for the life of the loan. Rate changes affect new loans, variable-rate loans and credit card balances.
How is the monthly payment calculated here?
With the standard amortisation formula for a fixed-rate loan, with interest charged monthly at one-twelfth of the yearly rate. Fees, taxes and insurance are not included.
Sources
Text version of this infographic
How interest rates change your loan payment
Move the sliders. Amber is interest: the cost of borrowing, on top of the money you borrowed.
Loan amount
Yearly interest rate
Loan length
Monthly payment
Total interest
Total repaid
Same loan, different rates: total repaid
Money borrowed
Interest paid