Effective Interest Rate Calculator
About This Tool
The online Effective Interest Rate Calculator is used to calculate the effective annual interest rate based on the nominal annual interest rate and the number of compounding periods per year.
What is Effective Interest Rate
The effective interest rate is the interest rate on a loan or financial product restated from the nominal interest rate as an interest rate with annual compound interest payable in arrears. It is used to compare the annual interest between loans with different compounding terms(daily, monthly, quarterly, semi-annually, annually, or other). It is also called effective annual interest rate, annual equivalent rate (AER) or simply effective rate.
Formula
The effective interest rate is calculated as if compounded annually. The following is the calculation formula for the effective interest rate:
r = [1 + (i/n)]n - 1
Where:
r = effective interest rate
i = nominal annual interest rate
n = number of compounding periods per year (for example, 12 for monthly compounding)
r = effective interest rate
i = nominal annual interest rate
n = number of compounding periods per year (for example, 12 for monthly compounding)
If the compounding is continuous, the calculation will be:
r = ei - 1
Where:
r = effective interest rate
i = nominal annual interest rate
e = 2.71828183
r = effective interest rate
i = nominal annual interest rate
e = 2.71828183
Effective Interest Rate Table
The effective interest rate table below shows the effective annual rate based on frequency of compounding for the nominal interest rates between 1% and 50%:
| Nominal Rate | Semi-Annually | Quarterly | Monthly | Daily | Continuous |
|---|---|---|---|---|---|
| 1% | 1.002% | 1.004% | 1.005% | 1.005% | 1.005% |
| 2% | 2.010% | 2.015% | 2.018% | 2.020% | 2.020% |
| 3% | 3.022% | 3.034% | 3.042% | 3.045% | 3.045% |
| 4% | 4.040% | 4.060% | 4.074% | 4.081% | 4.081% |
| 5% | 5.062% | 5.095% | 5.116% | 5.127% | 5.127% |
| 6% | 6.090% | 6.136% | 6.168% | 6.183% | 6.184% |
| 7% | 7.122% | 7.186% | 7.229% | 7.250% | 7.251% |
| 8% | 8.160% | 8.243% | 8.300% | 8.328% | 8.329% |
| 9% | 9.202% | 9.308% | 9.381% | 9.416% | 9.417% |
| 10% | 10.250% | 10.381% | 10.471% | 10.516% | 10.517% |
| 11% | 11.302% | 11.462% | 11.572% | 11.626% | 11.628% |
| 12% | 12.360% | 12.551% | 12.683% | 12.747% | 12.750% |
| 13% | 13.422% | 13.648% | 13.803% | 13.880% | 13.883% |
| 14% | 14.490% | 14.752% | 14.934% | 15.024% | 15.027% |
| 15% | 15.562% | 15.865% | 16.075% | 16.180% | 16.183% |
| 16% | 16.640% | 16.986% | 17.227% | 17.347% | 17.351% |
| 17% | 17.722% | 18.115% | 18.389% | 18.526% | 18.530% |
| 18% | 18.810% | 19.252% | 19.562% | 19.716% | 19.722% |
| 19% | 19.903% | 20.397% | 20.745% | 20.919% | 20.925% |
| 20% | 21.000% | 21.551% | 21.939% | 22.134% | 22.140% |
| 21% | 22.103% | 22.712% | 23.144% | 23.360% | 23.368% |
| 22% | 23.210% | 23.882% | 24.360% | 24.599% | 24.608% |
| 23% | 24.323% | 25.061% | 25.586% | 25.851% | 25.860% |
| 24% | 25.440% | 26.248% | 26.824% | 27.115% | 27.125% |
| 25% | 26.563% | 27.443% | 28.073% | 28.392% | 28.403% |
| 26% | 27.690% | 28.647% | 29.333% | 29.681% | 29.693% |
| 27% | 28.822% | 29.859% | 30.605% | 30.983% | 30.996% |
| 28% | 29.960% | 31.080% | 31.888% | 32.299% | 32.313% |
| 29% | 31.103% | 32.309% | 33.183% | 33.627% | 33.643% |
| 30% | 32.250% | 33.547% | 34.489% | 34.969% | 34.986% |
| 31% | 33.403% | 34.794% | 35.807% | 36.325% | 36.343% |
| 32% | 34.560% | 36.049% | 37.137% | 37.693% | 37.713% |
| 33% | 35.723% | 37.313% | 38.478% | 39.076% | 39.097% |
| 34% | 36.890% | 38.586% | 39.832% | 40.473% | 40.495% |
| 35% | 38.063% | 39.868% | 41.198% | 41.883% | 41.907% |
| 36% | 39.240% | 41.158% | 42.576% | 43.308% | 43.333% |
| 37% | 40.423% | 42.458% | 43.966% | 44.746% | 44.773% |
| 38% | 41.610% | 43.766% | 45.369% | 46.200% | 46.228% |
| 39% | 42.803% | 45.084% | 46.785% | 47.667% | 47.698% |
| 40% | 44.000% | 46.410% | 48.213% | 49.150% | 49.182% |
| 41% | 45.203% | 47.746% | 49.653% | 50.647% | 50.682% |
| 42% | 46.410% | 49.090% | 51.107% | 52.159% | 52.196% |
| 43% | 47.623% | 50.444% | 52.573% | 53.687% | 53.726% |
| 44% | 48.840% | 51.807% | 54.053% | 55.230% | 55.271% |
| 45% | 50.063% | 53.179% | 55.545% | 56.788% | 56.831% |
| 46% | 51.290% | 54.561% | 57.051% | 58.362% | 58.407% |
| 47% | 52.522% | 55.952% | 58.571% | 59.951% | 59.999% |
| 48% | 53.760% | 57.352% | 60.103% | 61.556% | 61.607% |
| 49% | 55.003% | 58.762% | 61.649% | 63.178% | 63.232% |
| 50% | 56.250% | 60.181% | 63.209% | 64.816% | 64.872% |
