Interest Rate Converter
Enter any rate and period — instantly convert to daily, weekly, monthly, quarterly, and annual effective rates.
A 1% monthly rate equals 12.68% per year (effective), not 12% — because compounding matters. This converter shows all equivalent rates across all periods, and converts between nominal (stated) and effective (real) rates.
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Rate Converter
Enter rate + period → see all equivalent rates
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Input rate
%
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Equivalent rates (effective)
Nominal annual rate (APR): —
Effective annual rate (APY): —
Effective annual rate (APY): —
How it's calculated
Nominal vs effective rate conversion
The effective rate for any period is calculated by finding the equivalent daily rate first, then compounding to the target period.
Step 1: Find effective rate per input period
If input is "effective": r_period = input rate
If input is "nominal annual": r_period = (1 + APR/n)^(1/n) − 1
Step 2: Convert to effective annual rate
EAR = (1 + r_period)^n − 1
where n = compounding periods per year
Step 3: Convert EAR to any target period
r_target = (1 + EAR)^(1/n_target) − 1
Example: 1%/month effective
EAR = (1.01)^12 − 1 = 12.6825%
Daily = (1 + 12.6825%)^(1/365) − 1 = 0.03285%
- 1Nominal annual rate—
- 2Effective annual rate (APY)—
- Nominal rate (APR)
- The stated annual rate, divided equally across periods. Does not account for intra-period compounding. Used in most loan disclosures.
- Effective rate (APY/EAR)
- The actual return including all compounding within the year. Always higher than or equal to the nominal rate. Used in savings account advertising.
- Compounding
- Earning interest on previously earned interest. More frequent compounding = higher effective rate for the same nominal rate.
Disclaimer: assumes constant compounding. Some financial products use simple interest (no compounding) — check your specific product terms.
Frequently asked questions
How do I convert monthly to annual rate?
Effective annual rate = (1 + monthly rate)^12 − 1. Example: 1%/month → (1.01)^12 − 1 = 12.68%/year. Do NOT simply multiply by 12 — that gives the nominal rate (12%), not the effective rate (12.68%).
What is the difference between APR and APY?
APR (Annual Percentage Rate) is the nominal rate — stated without compounding. APY (Annual Percentage Yield) is the effective rate — it includes compounding. A savings account with 5% APR compounded monthly has 5.116% APY. Always compare APY between savings accounts.
How do I convert annual to monthly rate?
Monthly effective rate = (1 + annual rate)^(1/12) − 1. Example: 10% annual → (1.10)^(1/12) − 1 = 0.797%/month. Or for the nominal monthly rate: simply divide the APR by 12.
Why does a 12%/year loan cost more than 1%/month?
They're the same nominal rate, but a loan stated as "1% per month" compounds monthly, giving an effective annual rate of 12.68%. A "12% annual" loan compounded annually costs exactly 12%. The monthly-stated loan is slightly more expensive due to more frequent compounding.