How this calculator works
The effective annual rate is the one-year growth rate after interest compounds. Enter the rate type you know, then select how often the nominal rate compounds. The final balance assumes no deposits, fees or withdrawals. Continuous compounding uses an annual exponential rate and has no separate period rate.
Formula
EAR = (1 + j/m)^m - 1. Nominal j = m[(1 + EAR)^(1/m) - 1]. Continuous EAR = exp(j) - 1. Final balance = initial balance x (1 + EAR)^years.
Worked example
A nominal rate of 12% compounded monthly gives EAR = 1.01^12 - 1 = 12.682503%. A 10% nominal rate compounded twice annually gives 10.25%.
Advertisement
Frequently asked questions
Is EAR the same as APR?
No. APR is a quoted annual borrowing measure and may have regulated fee rules. EAR here reflects compounding alone.
Can I enter a negative rate?
Yes, provided the compounding factor stays positive. A negative return reduces the projected balance.
Why does more frequent compounding matter?
For the same positive nominal annual rate, earlier interest earns additional interest before year end.