# EAR Calculator – Effective Annual Rate

URL: https://speedycalculator.com/calculators/finance/ear/
Last updated: 2026-10-25

> The EAR calculator converts a nominal annual interest rate into the effective annual rate for any compounding frequency, including continuous, and shows the rate per compounding period.

## Inputs

- Nominal annual interest rate (%)
- Compounding frequency

## Results

- Effective annual rate (EAR)
- Rate per compounding period

## Formula

```
EAR = (1 + r ÷ n)^n − 1
Continuous: EAR = e^r − 1
Periodic rate = r ÷ n
```

## Explanation

The effective annual rate shows the real yearly cost of a loan or return on savings once compounding is included. It is the right way to compare offers that compound at different frequencies.

### How to use the EAR Calculator – Effective Annual Rate

- **Nominal annual interest rate**
- **Compounding frequency**
- Every result field is editable: type into **Effective annual rate (EAR)** and **Nominal annual interest rate** plus every other field update to match.

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the nominal annual rate and the compounding frequency.

### Tips

- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.

### Common mistakes to avoid

- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).

### Inputs explained

FieldWhat to enterNominal annual interest rateIn %Compounding frequencyChoose one: Yearly, Semi-annually, Quarterly, Monthly …

### Example values

How the main result changes when **Nominal annual interest rate** changes and everything else stays at the example values above:

Nominal annual interest rate (%)Effective annual rate (EAR) (%)66.167899.38071212.68251516.07551819.56182426.8242

## Worked example

Inputs — Nominal annual interest rate: 12 %; Compounding frequency: Monthly.

Results — **Effective annual rate (EAR) = 12.6825 %**; Rate per compounding period = 1 %.

## FAQ

**What is the effective annual rate?**
The actual yearly rate after compounding.

**Is EAR the same as APY?**
Yes – APY is the name used for savings accounts.

**Why is EAR higher than the nominal rate?**
Interest earned during the year earns interest itself.

**What formula does the EAR Calculator – Effective Annual Rate use?**
EAR = (1 + r ÷ n)^n − 1.