Effective Annual Rate
Convert a nominal annual rate and compounding frequency into an effective rate.
Your numbers
Effective annual rate
Educational estimate using your assumptions; no live rates, tax rules or investment recommendations. Returns can be negative and are not guaranteed.
Scenario comparison
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Formula
Use EAR = (1+j/m)^m−1. j is the nominal annual rate as a fraction, m is compounding periods per year, and EAR is the effective annual rate as a fraction.
Convert a nominal annual rate and compounding frequency into an effective rate.
Worked example
- Nominal annual rate (%)
- 12
- Compounding periods per year
- 12
- Effective annual rate
- 12.6825030132 %
Scope and limitations
Educational estimate using your assumptions; no live rates, tax rules or investment recommendations. Returns can be negative and are not guaranteed.
Inputs are checked for missing values and allowed ranges. A result outside the finite numeric range is not displayed. Rounding affects display, while the calculation uses the model’s numeric precision.
Check your units and assumptions before relying on a result. Changing a label does not convert a currency or physical unit.
Formula version: b77b99339e6f · Example checked: