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EAR Calculator (Effective Annual Rate)

Finance

Calculate the Effective Annual Rate (EAR) from a nominal interest rate and compounding frequency, the standard measure for comparing loans or investments that compound at different intervals.

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Effective Annual Rate (EAR)

12.6825

The true annual rate once compounding is factored in

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Odeh Ahwal

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Odeh Ahwal
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Frequently Asked Questions

Is EAR the same thing as APY?

Yes, mathematically. EAR is the general term used for loans and investments; APY is the same formula applied specifically to bank deposits.

Why does EAR matter more than the nominal rate?

The nominal rate alone does not tell you the real cost or return once compounding within the year is included, which is exactly what EAR captures.

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