Convert an effective annual rate (APY) into the nominal annual rate for a given compounding frequency. Enter your values; the result updates as you type, with the method shown below.
About this calculator
This tool converts an effective annual rate (APY) back into the nominal annual rate for a given compounding frequency. It is the reverse of the effective rate calculator, useful when an offer quotes only the effective yield.
Enter the effective annual rate and the compounding frequency. The calculator shows the nominal annual rate and the rate per period.
When to use it
- Comparing a savings APY with a loan’s nominal rate.
- Converting rates for a finance exercise.
- Checking a bank’s quoted figures.
- Building a spreadsheet model.
How to read the result
Nominal = k × ((1 + effective)^(1/k) − 1). An effective 5.12% with monthly compounding is a nominal 5.00%.
The more frequent the compounding, the larger the gap between the two rates.
Mistakes to avoid
- Mixing effective and nominal rates in one comparison.
- Choosing the wrong compounding frequency.
- Expecting a big difference at low rates.
Formula
r = k × ((1 + e)^(1/k) − 1)
Worked example
An effective 5.12% with monthly compounding is a nominal 5.00%.
Frequently asked questions
What is the difference?
The nominal rate ignores compounding within the year; the effective rate includes it.
Which one do banks quote?
Loans often show a nominal rate; savings often show an effective rate.
Converse tool?
Use the effective rate calculator.
When do I need it?
When an offer gives the effective rate and you need the nominal one, or the reverse.
Is the rate per period useful?
Yes, it is the rate applied at each compounding step.
Reverse tool?
Use the effective rate calculator.
Related calculators
- Future Value of an Annuity Calculator
- Present Value of an Annuity Calculator
- Periodic Interest Rate Calculator (Annual to Monthly)
- All calculators in this category
Results are estimates for information only. Check important figures with a professional.