Rytvae Consulting · Think Right · Invest Right
Nominal ↔ Effective Rate Calculator
Result
Chart
Show formula & working
Effective = (1 + nominal ÷ m)m − 1 · Nominal = m × ((1 + effective)1/m − 1)
Continuous: effective = enominal − 1 · nominal = ln(1 + effective)
Details
How this works
A 12% rate compounded monthly is really 12.68% a year. Comparing products needs the effective rate.
Going the other way tells you what nominal rate gives a target effective yield.
Frequently asked questions
Which rate do banks quote?
Deposit rates are nominal with quarterly compounding; the bank may also show the annualised yield.
Do loans work the same way?
Yes — monthly-reducing loan rates are nominal; the effective cost is higher.