Effective Rate (EAR) Calculator

The effective annual rate converts any compounding frequency into the single yearly rate that produces the same result, making loans and deposits comparable. The calculation follows EAR = (1 + nominal ÷ n)^n − 1. A 12% nominal rate compounded monthly gives (1 + 0.12/12)^12 − 1 = 12.68% effective; daily compounding pushes it to 12.75% — the gap between quoted and real cost. The result updates instantly whenever you change an input, and every figure is shown in the same currency or units you entered, with no hidden conversion applied.

1. 1

   Step 1

   Enter the required figures for the Effective Interest Rate Calculator in the fields above.

2. 2

   Step 2

   The tool applies EAR = (1 + nominal ÷ n)^n − 1 to your numbers automatically.

3. 3

   Step 3

   Read the result, shown in the same units you entered.

4. 4

   Step 4

   Adjust the inputs to compare scenarios side by side.

• Comparing nominal with effective

• Confusing APR with EAR

• Ignoring continuous compounding