Interest Calculators
Effective Interest Rate Calculator
Convert a nominal rate into the effective annual rate for any compounding frequency, so accounts and loans can be compared fairly.
Effective annual rate
6.17%
- Uplift over the nominal rate
- 0.17%
- Interest on the illustrated balance
- $617
How this calculator works
EAR = (1 + r ÷ m)^m − 1
- r
- the nominal annual rate
- m
- compounding periods per year
Example calculation
Illustrative example — not advice
Worked example — the effective interest rate calculator as it loads, using the default figures below.
- 01Enter nominal annual rate: 6%.
- 02Enter compounding frequency: Monthly.
- 03Enter balance to illustrate: $10,000.
- 04Read the effective annual rate from the results panel: 6.17%.
Effective annual rate: 6.17%. Uplift over the nominal rate: 0.17%. Interest on the illustrated balance: $617.
These figures come straight from the calculator above running on the values listed, so you can retype them and confirm every number yourself. Change any input and the results update immediately. Illustrative only — not a quote, offer or recommendation.
Important considerations
- Savings products quote this as APY; loans quote a comparable APR.
- Fees are not included — the effective rate covers compounding only.
Related calculators
- Compound Interest CalculatorProject the growth of a balance with compounding and regular contributions.
- APR CalculatorThe true annualised cost of a loan once fees are included.
- Simple Interest CalculatorInterest charged on the original amount only.
- Savings Goal CalculatorMonthly saving needed to hit a target.
- Mortgage CalculatorEstimate your total monthly mortgage payment and see the amortisation schedule.
- Loan Payment CalculatorMonthly repayment, total interest and the effect of paying extra each month.
Terms used here
Frequently asked questions
Does more frequent compounding always help?
On savings yes, on debt no. The effect grows with the rate and shrinks at very short intervals.
Disclaimer
Legamoney calculators are educational tools. Results are estimates based on the figures you enter and do not constitute financial, tax or legal advice.
Last reviewed 2026-08-01