Enter any rate and automatically convert between annual, monthly, daily rates and effective annual rate. Supports compounding frequency selection.
Effective Annual Rate (EAR) accounts for compounding. For example, a 1% monthly rate translates to ~12.68% EAR, not simply 12%.
Monthly rate = (1 + annual rate)^(1/12) - 1. For example, 12% annual ≈ 0.95% monthly. Reverse: annual = (1 + monthly)^12 - 1.
Due to compounding. Interest earned each period adds to the principal, so the next period's interest is calculated on a larger base.
Daily rate = annual rate ÷ 365 (or 360 for some institutions). Exact: (1 + annual)^(1/365) - 1.