Effective Interest Rate Calculator
Compare bank offers fairly: convert any nominal interest rate and its compounding frequency into the true effective annual rate (EAR), and see how much interest a test principal actually earns in one year.
Effective Annual Rate (EAR)
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Rate Per Compounding Period
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Interest Earned in 1 Year on Principal
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How to use
- Enter the nominal annual rate quoted by the bank.
- Select the compounding frequency — how often interest is added.
- See the EAR — this is the real yearly rate used to compare offers.
Note
Formula: EAR = (1 + nominal/m)^m − 1. The more often interest is added, the higher the effective rate.