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Effective annual rate calculator

Convert a nominal annual interest rate with multiple compounding periods into a mathematical effective annual rate.

Free & no registration Calculated in your browser
01

Your inputs

The starting values are an example.

Decimals: 12.5 · Thousands: 1,234.56. Follow the field instructions for lists.

02

Your result

Enter your values and select Calculate.

Your calculation will appear here.

Your result will include the relevant values and units.

Understand the calculation

Formula and example

How it is calculated

Effective annual rate = ((1 + nominal rate / m)ᵐ − 1) × 100, with the nominal rate as a decimal

Worked example

A 12% nominal annual rate compounded monthly gives an effective annual rate of approximately 12.68%.

Things to check

  • This calculation excludes borrowing costs and does not replace the legally defined annual percentage rate shown in a loan offer.