Effective Annual Rate (EAR) Calculator

Calculate your Effective Annual Rate (EAR) instantly with our free EAR Calculator. Just enter your APR and choose a compounding frequency to see your real annual yield. Perfect for comparing loans, savings accounts, or investments — get the true picture of what your money is earning (or costing) you.

How to Use the EAR Calculator

Here’s a quick 3-step guide on how to use the Effective Annual Rate (EAR) calculator to convert your nominal Annual Percentage Rate (APR) into its true yearly return, accounting for compounding frequency.

Enter the Annual Percentage Rate (APR).

Input the nominal annual rate provided by your bank or loan agreement. Enter it as a percentage, not a decimal — for example, type 5 for 5%, not 0.05. This value represents the stated rate before compounding effects are applied.

APR input field where you type the stated annual rate.

Select the compounding frequency.

Choose how often interest compounds from the dropdown list: annually, semi-annually, quarterly, monthly, bi-weekly, weekly, daily, or continuously. Most savings accounts use monthly compounding, while credit cards often compound daily. The more frequent the compounding, the higher the EAR.

Dropdown menu showing compounding frequency options.

Review the Effective Annual Rate (EAR) result.

The calculator instantly displays the EAR, showing the true annualized rate after compounding. You’ll also see the percentage difference from APR and the compounding effect factor. Use this to compare investment returns or loan costs accurately. Results update automatically as you change inputs.

Result panel showing EAR, difference from APR, and compounding effect.

Tip: Enter rates as whole percentages (e.g., 5 for 5%), and double-check the compounding frequency—it's the most common source of confusion.

Frequently Asked Questions

How do you compute EAR from a 12% APR compounded monthly?

EAR = (1 + 0.12/12)^12 − 1 = 0.126825... → 12.6825% (displayed as 12.6825% with 4 decimal places).

What compounding frequencies are supported?

Annual, semiannual, quarterly, bimonthly, monthly, daily. Irregular schedules aren’t supported.

Why does EAR differ from APR?

EAR reflects the impact of intra-year compounding, so higher compounding frequency increases the effective annual yield for the same APR.

Do you include fees in the calculation?

No. The calculation assumes a clean nominal rate with no fees or irregular cash flows.

What rounding policy do you use for the displayed EAR?

We compute to at least 6 decimal places and display to 4 decimal places using round half-up.

Methodology & Sources

Use the nominal interest rate and compounding frequency to compute the equivalent effective annual rate, using the formula . If compounding continuously, use .