Effective Annual Rate Calculator
Convert a nominal annual interest rate into its effective annual rate (EAR) for any compounding frequency, including continuous.
Your inputs
Results
Effective annual rate
12.6825%
- Rate per compounding period
- 1%
✓Exact calculation — rounded only for display
Inputs are never added to links for financial, salary or health calculators.
What this calculator does
A nominal rate compounded monthly earns more than the same rate compounded yearly. EAR expresses every option as the equivalent once-a-year rate so they can be compared directly.
Formula and method
Worked example
Calculated by this tool with its default inputs:
Inputs
- Nominal annual rate: 12 %
- Compounding: Monthly
Results
- Effective annual rate: 12.6825%
- Rate per compounding period: 1%
How to read the results
Use EAR (or APY) to compare products that compound at different frequencies.
Assumptions and limitations
- For deposits, EAR is the same concept as APY.
Financial results are estimates based on the inputs and assumptions shown. They are not financial advice; confirm figures with your lender, provider or a qualified adviser before making decisions.
Questions
What is the difference between APR and EAR?
APR is usually a nominal rate (periodic rate × periods per year); EAR includes compounding.
Methodology and verification
- Result type
- Exact mathematical calculation (rounded only for display)
- Formula version
- 1.0
- Automated verification
- 4 reference and validation test cases, checked against independently computed values. The site cannot be built if any of them fail.
- Editorial review
- Awaiting human editorial review. The explanation was drafted with AI assistance; the formula and examples are verified by the automated tests above.
Privacy
Everything you enter is calculated in this browser and is not sent to Numerith or anyone else. Because this calculator can involve personal financial or health details, your inputs are never added to share links or saved to history. Privacy policy