Effective Interest Rate Calculator
Convert Nominal Rate to Effective Annual Rate (EAR).
Nominal vs Effective Rate
The Nominal Rate (or APR) doesn't account for the effect of compounding within the year. The Effective Rate (EAR or APY) does, showing the true return or cost.
Formula
r_eff = (1 + i/n)^n - 1
- i: Nominal Annual Interest Rate (decimal).
- n: Number of compounding periods per year.