Effective Interest Rate Calculator
About Effective Interest Rate Calculator
Convert nominal interest into an effective annual rate so rates with different compounding frequencies are easier to compare.
How to Use
Convert nominal interest into an effective annual rate so rates with different compounding frequencies are easier to compare. Enter the Nominal rate and Compounding periods values and review the Effective annual rate and Periodic rate outputs after you calculate.
- Open the calculator : Use Effective Interest Rate Calculator from the Finance category.
- Check the inputs : Review the required values and any optional settings.
- Read the formula : Use the formula and notes below to understand how the result is produced.
Common Questions
What formula does the Effective Interest Rate Calculator use?
EAR = (1 + nominal rate / periods)^periods - 1.
Inputs
- Nominal rate
- Compounding periods
Outputs
- Effective annual rate
- Periodic rate
Formula
EAR = (1 + nominal rate / periods)^periods - 1.