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About the Interest Rate Calculator
This Interest Rate Calculator computes the effective annual rate and APR for loans and investments. It converts a stated rate into the true yearly cost or return under different compounding schedules and compares several rate options side by side.
The calculator uses the standard effective rate formula (1 + r/n)^n - 1, where r is the nominal annual rate and n is the number of compounding periods per year. It also derives APR from the same inputs. You enter the stated rate, the compounding frequency, the term, and the principal. Compare APR and the effective rate together, since monthly compounding makes the real cost higher than the quoted rate.
- Enter the nominal interest rate for your loan or investment.
- Select the compounding frequency, such as monthly or quarterly.
- Review the effective rate and APR for each option you compare.