Effective Annual Rate (EAR) Calculator
Convert a nominal annual rate to a mathematical effective annual rate for a selected compounding frequency.
Formula and sources updated · Data sources · 1View algorithm, constants and default inputs (JSON)
Nominal and effective annual rates
About this calculator
This calculation assumes the stated nominal rate compounds at the selected frequency for one year. It excludes fees, changing rates, day-count rules, deposits or withdrawals, and product-specific terms. It is not an official deposit APY or loan APR.
Worked example
calculated with the default values below
Nominal (stated) rate 6 % · Compounding frequency Monthly Effective annual rate 6.168 % · Nominal rate 6 % · Rate per compounding period 0.5 % · Effective minus nominal 0.168 pp · Compounding periods per year 12
Method and assumptions
Formula basis and scope
EAR = ((1 + nominal percent / (100 × m))^m - 1) × 100.
m is the selected number of compounding periods per year; fees and taxes are excluded.
Data sources
Disclaimer
These calculators give estimates for general information only. They are not financial, tax or investment advice and do not take your personal circumstances into account. Before borrowing, investing or filing, confirm the numbers with a qualified adviser in your jurisdiction.
Implementation source
This record describes the implementation used by this page. It is not independent validation. External references, when available, support only the stated formula or definition; estimates and custom rules retain their own assumptions.
Formula and variables
EAR = (1 + r ÷ n)^n − 1
- r
- Nominal annual rate (%)
- n
- Compounding periods per year
- EAR
- Effective annual rate (%)
EAR = (1 + r ÷ n)^n − 1. Assumes the nominal annual rate compounds n times for one year; excludes fees and product-specific APY/APR rules.
Frequently asked questions
Does this replace a bank’s APY or a loan’s APR?
No. This calculator shows the mathematical effect of compounding on a stated rate. Official deposit APY and loan APR disclosures follow product and jurisdiction rules and may include details this model omits, such as fees.