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EAR Calculator
Convert a nominal (stated) interest rate into its true Effective Annual Rate (EAR) based on how often it compounds.
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What is EAR?
The Effective Annual Rate (EAR), also called the annual equivalent rate, reflects the true yearly cost or return of a nominal interest rate once compounding within the year is taken into account.
The Formula
EAR = (1 + Nominal Rate ÷ n)n – 1, where n is the number of compounding periods per year. The more frequently interest compounds, the higher the EAR will be relative to the stated nominal rate.
Note: This tool is for general educational and planning purposes only.
Last reviewed August 2026