Online Effective Interest Rate Calculator
Convert nominal annual rate and compounding periods per year to effective annual rate (EAR) as a percentage.
Frequently Asked Questions
- How is effective rate computed?
- Effective annual rate % = ((1 + nominal%/100 / n)^n - 1) × 100, where n is compounding periods per year.
- What is the difference between nominal and effective?
- Nominal rate is the stated rate; effective rate is what you actually earn or pay after compounding.
- Does more compounding increase effective rate?
- Yes. For a given nominal rate, more compounding periods per year yield a higher effective rate.
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