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Financial calculators and cash flows · Effective annual rate (%)
Effective annual rate (%). The effective rate is what the nominal rate becomes once compounding is counted.
Effective annual rate (%)
Mathematical examples based on your inputs; taxes, fees and market forecasts are not included.
Results are for study and planning. Check decisions about real money with a qualified professional.
Your calculation
- Effective annual rate (%)
- 12.6825030132
How the calculation works
The effective rate is what the nominal rate becomes once compounding is counted.
A worked example
- Nominal annual rate (%)
- 12
- Compounding per year
- 12
Step by step
- Nominal annual rate (%) ÷ Compounding per year = 12 % ÷ 12 = 1 %
- (1 + 1 %)^12 = 1.1268
- Effective annual rate (%) = 1.1268 − 1 = 12.683 %
Enter the quoted nominal rate and how often interest is added in a year: 12 for monthly, 4 for quarterly, 365 for daily.
If one input changes
- Compounding per year = 1: Effective annual rate (%) = 12
- Compounding per year = 2: Effective annual rate (%) = 12.36
- Compounding per year = 4: Effective annual rate (%) = 12.55
- Compounding per year = 365: Effective annual rate (%) = 12.75
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