📈 EAR Calculator
Effective Annual Rate from APR and compounding
How to Use This Calculator
1
Enter APR
Type the nominal annual percentage rate.
2
Select Compounding
Choose how often interest compounds.
3
Calculate EAR
Click to see the effective annual rate.
Formula
EAR = (1 + r/n)n − 1
r = nominal APR (decimal), n = compounds per year
Example: r = 12%, n = 12 → EAR = (1 + 0.12/12)12 − 1 = 12.68%
About EAR
EAR converts nominal APR plus compounding into a single annualized rate for apples‑to‑apples comparisons.
When to Use
- Comparing savings accounts and CDs
- Evaluating loan costs with different compounding
- Normalizing quoted APRs
Tips
- Use EAR to compare products; use APR for disclosures
- Higher compounding → higher EAR
Frequently Asked Questions
Is EAR always higher than APR?
Yes, unless compounding is annual (n=1), in which case EAR = APR.
What if compounding is continuous?
Use EAR = e^r − 1 for continuous compounding.
Can EAR be used for loans?
Yes; it shows the effective annual cost including compounding frequency.