APR & Effective Annual Rate
Finance & LoansConvert nominal Annual Percentage Rate (APR) to Effective Annual Rate (EAR / APY) across daily, monthly, quarterly, and semi-annual compounding frequencies to compare true loan and savings yields.
Effective annual rate (EAR)
About this calculator
Financial institutions often market nominal interest rates that mask the true cost of borrowing or actual yield of savings accounts. Because interest compounds over multiple periods per year, the effective rate earned or paid is higher than the nominal APR.
This calculator converts nominal rates to Effective Annual Rate (EAR) and Annual Percentage Yield (APY), enabling apple-to-apple comparisons between credit cards, auto loans, bonds, and certificates of deposit (CDs).
How It Works & Formula
Effective Annual Rate is calculated as EAR = (1 + r/m)α΅ - 1, where r is the nominal annual rate and m is the number of compounding periods per year. For continuous compounding, EAR = eΚ³ - 1.
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