Effective Annual Interest Rate Calculator
Turn a nominal rate and its compounding frequency into the
effective annual rate you actually earn or pay.
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Two products with the same nominal rate can have different effective rates.
Effective Annual Interest Rate Calculator
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₹
Nominal Rate
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Extra from Compounding
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Effective Annual Rate (EAR)
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EAR by compounding frequency (same nominal rate)
Assumptions & method
- EAR = (1 + r ÷ m)^m − 1, where r is the nominal rate and m is compounding periods per year. Continuous compounding uses EAR = e^r − 1.
- The nominal rate is held constant for one year and interest is credited at even intervals.
- Fees are excluded unless you switch the fee option on. With it on, net EAR = EAR − fee for savings, or EAR + fee for borrowing. This is a simple additive approximation.
- The sample balance shows one year of interest only. Figures are estimates, not guarantees.
Compounding Comparison
| Compounding | EAR | Gain vs Nominal | 1-Year Interest (₹) | Net EAR |
|---|
What is the effective annual interest rate?
The effective annual rate (EAR) is the true yearly growth rate of a balance once interest is added to the principal and starts earning interest itself. A nominal rate only tells you the headline figure and the compounding schedule. EAR rolls both into one number, so it lets you compare a daily-compounding account with a quarterly one on equal terms. The gap between nominal and effective grows with both the rate and the frequency, and it flattens out towards the continuous limit.
Nominal rate to EAR in one step
Six compounding options side by side
Optional annual fee, kept separate by default
Sample balance shows rupee impact
Estimates only, not guarantees