Interest Rate Converter
Convert between annual, monthly and daily interest rates, under simple and compound interest, and turn a nominal annual rate into the effective annual APY — including continuous compounding.
Converted rates
Effective annual rate by frequency
Nominal vs effective annual rate
What is it
The same loan can be quoted as an annual, monthly or daily rate, and simple and compound interest give very different annual costs. Converting between units properly — and turning a nominal rate into an effective annual one — stops you comparing apples with oranges.
Notes & fun facts
Banks quote the same product in many different units: a daily rate for overdrafts, a monthly rate for instalments, an annual rate for deposits. Compound interest quietly adds a premium the further the frequency gets from the annual period — continuous compounding is where it peaks.
Origin & history
The distinction between nominal and effective interest rates has existed since the first annuity tables, and became standard with the rise of actuarial science in the 18th century. Regulators made effective annual rate disclosure mandatory for lending in most markets after the 2008 crisis.
Related keywords
Feedback
Found a problem with a tool or have a suggestion? Email us — we read every message.
