Free planEASe utility
The same interest rate, quoted fourteen ways. Type a rate into any box and every equivalent rate updates. Share it as a link or download a PDF.
Try: Credit card at 24% APR Savings at 4.5% APY Canadian mortgage at 6.5%
A nominal interest rate of 10.0000%, compounded as shown, is equivalent to these effective annual rates.
These nominal interest rates, compounded as shown, each produce an effective annual rate of 10.0000%.
One bank offers 12% compounded monthly. Another offers 11.8% compounded daily. Enter 12% as the monthly nominal rate and read across to the daily rate it equals.
What nominal and effective rates mean, how compounding changes them, and how to use this calculator to compare quotes.
Type a rate into any of the fourteen boxes and the other thirteen update to the equivalent rates. The right-hand table holds nominal rates, the way loans and deposits are usually quoted, one for each compounding frequency. The left-hand table holds the effective annual rates those nominal rates grow to.
To compare two quotes, enter the first one in its box and read across to the compounding frequency of the second. The first two examples above are worked this way.
The rate you typed, and which box you typed it in, are kept in the page address. Copy link gives you a link that rebuilds the same comparison, and Download PDF creates a one-page report in your browser. Nothing is stored on our servers.
A nominal rate is the quoted annual rate. It is divided by the number of compounding periods, and that share is charged or paid each period. 12% compounded monthly means 1% a month.
The effective annual rate is what the money actually grows by in a year once interest earns interest. 1% a month compounds to 12.6825% a year, not 12%.
In the U.S., APR on consumer loans is a nominal rate. Under the Truth in Lending Act it also includes certain finance charges and fees, so it can differ from the note rate. APY on deposit accounts is an effective annual rate: it includes compounding, which is why a savings account's APY is higher than its stated interest rate.
The more often interest compounds, the higher the effective rate, but the gains shrink quickly. At 10% nominal, annual compounding gives 10.0000%, monthly gives 10.4713%, daily gives 10.5156% and continuous compounding gives 10.5171%. Going from monthly to daily adds less than a twentieth of a point.
The formulas: an effective rate from a nominal rate r compounded n times a year is (1 + r/n)n − 1. A nominal rate from an effective rate e is n × ((1 + e)1/n − 1). Continuous compounding is calculated with 100,000 periods a year, as in the planEASe desktop software, which matches the exact continuous formula to the four decimals shown.
It converts one rate between compounding bases. It does not include loan fees or points, the 360-day year some lenders use to calculate interest, or the regulatory APR calculation. When two quotes differ in fees or day count as well as compounding, compare the full cost of each loan.
This calculator is a planning tool, not financial advice.
A nominal rate is the quoted annual rate; it is divided by the number of compounding periods and paid each period. The effective annual rate is what the money actually grows by in a year once interest earns interest. Rates from 0% to 60% are accepted.
This is the Interest Rate Comparisons utility from the planEASe desktop software. Read the manual page, or try the other free planEASe tools: the Loan Planner, the Asset Depreciation Calculator and the IRR, NPV & MIRR Cash Flow Calculator.