Effective Interest Rate Calculator
Convert nominal to effective (annual)
Instructions
1
Enter Nominal Rate
The quoted annual rate.
2
Select Compounding
Compounding frequency per year.
3
Calculate
View the effective annual rate.
Formula
i_eff = (1 + i_nom/n)n − 1
Common Questions
Is this the same as EAR?
Yes, effective annual rate is often called EAR.
Why is it higher than nominal?
Compounding increases the actual annualized rate.