## Effective Annual Interest Rate (EAR)

## Online Calculators **for Business & Investment**

**Effective Annual Interest Rate (EAR)**

Often interest rates are quoted by lenders or other on a "simple interest rate basis", which assumes there is only one compounding period.

This can be misleading because as the number of compounding periods affects the final, actual interest rate paid.

This calculator allows you to turn a simple rate into an **Effective Annual Rate (EAR)** (the true rate you may pay or receive). This can be done as long as you know the quoted simple interest rate and the compounding frequency per year.

*Effective Annual Interest Rate (EAR) Calculator*

**The calculator asks for:**

*Quoted Simple Interest Rate*, you can find this out from your bank or financier.

*Compounding Periods per Year*, you can find this out from your bank or financier.

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