Effective Annual Rate Calculator

How the EAR Calculator Works

The EAR Calculator is an accessible and practical tool designed for financial consumers, whether you’re an individual borrower or an investor. Here’s a step-by-step guide on how to use it:

  1. Input Nominal Interest Rate: Start by entering the nominal interest rate, which is the stated or advertised annual rate provided by the financial institution.

  2. Input Compounding Frequency: Specify the frequency at which the interest is compounded per year (e.g., annually, semi-annually, quarterly, monthly).

  3. Calculate Effective Annual Rate (EAR): The calculator will automatically compute the Effective Annual Rate (EAR), providing you with the true annual cost of borrowing or the actual annual return on investments.

  4. Make Informed Financial Decisions: Use the calculated EAR to assess the real cost or return of loans, credit cards, or investments, and make well-informed financial choices.

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