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Finance Calculators

Effective Annual Rate (EAR) Calculator

Verified formula Updated Jun 2026 Private — runs on your device

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Verified formula Private

Effective annual rate

12.6825%

For general information only — not financial, tax, legal or medical advice. Verify before you rely on it.

How to use the Effective Annual Rate (EAR) Calculator

The Effective Annual Rate (EAR) Calculator works out your effective annual rate in an instant. Enter nominal annual rate and compounding periods per year and the result updates as you type — it is free, needs no sign-up, and runs entirely in your browser so your figures stay private.

  1. Enter the nominal annual rate.
  2. Enter the compounding periods per year.
  3. Read off your effective annual rate — the calculator updates automatically, with no button to press.

Formula

The Effective Annual Rate (EAR) Calculator uses the formula:

Effective annual rate = ((1 + Nominal annual rate ÷ 100 ÷ Compounding periods per year)^(Compounding periods per year) - 1) × 100

Worked example

For example, with nominal annual rate of 12% and compounding periods per year of 12, the effective annual rate is 12.6825%.

Inputs used
Nominal annual rate 12%
Compounding periods per year 12
Results
Effective annual rate 12.6825%

Results are estimates for educational use, not professional advice.

Frequently asked questions

EAR is the true yearly rate once compounding is included. A 12% nominal rate compounded monthly equals about 12.68% effective.

EAR = (1 + nominal ÷ n)^n − 1, where n is the number of compounding periods per year.

Because interest earns interest within the year. The more often it compounds, the higher the effective rate.

It lets you compare loans or deposits with different compounding frequencies on an equal basis.

Enter the nominal annual rate. Enter the compounding periods per year. Read off your effective annual rate — the calculator updates automatically, with no button to press.

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