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Effective Annual Rate Calculator — EAR

Convert a nominal annual interest rate to EAR with monthly, quarterly or daily compounding. Includes the formula and a 12% worked example.

Amounts stay on this deviceMethod and assumptions below
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Estimate based on your inputs and the stated assumptions.

How to use this tool

  1. Enter nominal annual rate, compounding periods per year.
  2. Select Calculate to view the result.
  3. Check the method and assumptions below before using the result.

Input reference and sample values

Use the units and choices shown for each field. Sample values are provided for practice, not as recommendations.

InputFormat and unitsSample
Nominal annual rateNumeric value. Unit: %. Zero or positive. Maximum: 100.12
Compounding periods per yearNumeric value. Minimum: 1. Maximum: 366.12

Result for these sample inputs

12.682503 percent

Select Try the example in the form to load these values and calculate them again. This replaces the current form inputs. Compare the result with the method and worked explanation below.

The method, explained

Effective annual rate = [(1 + nominal rate/100 ÷ periods)^periods − 1] × 100.

A WORKED EXAMPLE

A 12% nominal rate compounded monthly has an effective annual rate of about 12.6825%.

Understanding your result

Enter the nominal annual percentage rate, not a monthly rate. Compare results only when the compounding convention and excluded charges match. This tool does not calculate a regulated disclosure rate or account for fees.

What to keep in mind

Assumes equal compounding periods and a constant nominal rate. Fees, taxes and cash-flow timing are excluded; this is not a jurisdiction-specific APR calculation.

Common questions

How many compounding periods should I enter?

Use 1 for annual, 4 for quarterly, 12 for monthly, or the actual number of daily periods specified by the product. The calculation assumes equal periods.

What is the EAR of 12% compounded monthly?

It is approximately 12.6825%, calculated as [(1 + 0.12 ÷ 12)^12 − 1] × 100.

Is this an APR or APY calculator?

It calculates the mathematical effective annual rate under periodic compounding. Product disclosures may follow specific conventions or include different charges, so do not assume those labels are interchangeable.

Methodology maintained by ClarityKit. How these tools are built and checked.