Interest Conversion Calculator

Convert between nominal (NOM) and effective (EFF) annual rates for a chosen C/Y — BA II Plus ICONV.

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Educational estimate only — not investment, lending, or financial advice. Confirm figures with statements or a qualified professional before you act.

About this tool

Convert between a nominal annual rate and the effective annual rate for a given number of compounding periods. Use it to compare an APR quoted with monthly compounding against an APY quoted yearly.

How to use

1
Step 1
Choose whether to find the effective rate (EFF) or the nominal rate (NOM).
2
Step 2
Enter the known rate as a percentage.
3
Step 3
Enter the number of compounds per year.
4
Step 4
Press Calculate.

How it works

A nominal rate is the headline figure before compounding is counted. The effective rate is what you actually earn or pay over a year once interest is added to the balance. The more often interest compounds, the higher the effective rate for the same nominal rate. Going the other way, NOM recovers the nominal rate from an effective one.

EFF = (1 + NOM ÷ m)^m − 1      NOM = m × [(1 + EFF)^(1/m) − 1]      m = compounds per year

Worked example

12% compounded monthly

Input
NOM 12%; 12 compounds a year
Output
EFF 12.6825%
Walkthrough
Monthly rate is 1%. 1.01^12 = 1.126825, so the effective rate is 12.6825%. Other cases: 8% compounded quarterly is 8.2432%; 18% compounded daily (365) is 19.7164%.

Limitations

  • Assumes regular compounding at the frequency you enter.
  • Does not include fees.

Questions

How do I convert APR to APY?
Divide the APR by the compounds per year, add 1, raise to the power of the compounds per year and subtract 1. 12% monthly gives 12.6825%.
Why is the effective rate higher than the nominal rate?
Because interest is added to the balance and earns interest itself within the year.
What is the effective rate of 8% compounded quarterly?
8.2432%.
Can I go from effective back to nominal?
Yes, choose NOM mode. An effective 12.68% compounded monthly is a nominal rate of about 11.9978%.

Features

  • Nominal to effective and back
  • Any compounding frequency
  • Runs in your browser

Related resources

Guides and videos from around the web—opens on YouTube or the publisher’s site.

  • Present value and future value

    Khan Academy

    TVM vocabulary for N/I/Y/PV/PMT/FV solves.

    Watch on YouTube

  • Compound interest introduction

    Khan Academy

    Core compounding behind TVM and ICONV tools.

    Watch on YouTube

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