# Effective interest rate calculator

We are providing Effective annual interest rate calculator to aid you in interest calculation.

 Nominal annual interest rate: % per year Compounding period: Days Weeks Months Quarters Other Compounding periods per year: Effective period interest rate: % per month Effective annual interest rate: % per year

## Effective interest rate calculation

#### Effective annual interest rate calculation

The effective interest rate is apparently equal to the addition of 1 plus the nominal interest rate which is to be in percent and then divided by the number of compounding periods per year n, to the power of n, subtracting 1.

Effective Rate = (1 + Nominal Rate / n)n – 1

#### Effective period interest rate calculation

The effective period interest rate is totally equal to the nominal annual interest rate which is divided by the number of periods every year n:

Effective Period Rate = Nominal Annual Rate / n

## Learn to calculate effective interest rate

Here are the Effective interest rate calculations to help yo calculate with ease.

### Effective period interest rate calculation

The effective period for a particular interest rate is apparently equal to the nominal annual interest rate which is divided by the total number of periods per year n:

Effective Period Rate = Nominal Annual Rate / n

#### For Example

If you need to calculate the effective period interest rate for the nominal annual interest rate of 6% compounded monthly?

Effective Period Rate = 6% / 12 months = 0.06 / 12 = 0.005%

### Effective annual interest rate calculation

The formula used to calculate effective annual interest rate is that equal to the sum of number 1 and the nominal interest rate in percent is divided by the total number of compounding periods every year n, to the power of n, subtracting 1.

Effective Rate = (1 + Nominal Rate / n)n – 1

#### For Example

If you need to calculate the effective annual interest rate for the nominal annual interest rate of 4% compounded monthly?

Effective Rate = (1 + 4% / 12)12 – 1

= (1 + 0.04 / 12)12 – 1

= 4.074 %