Interest Rate Converter
Contents
Compound Interest Converter — Annual, Monthly & Quarterly Rates
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Convert between annual, monthly, quarterly and daily compounding rates. Find EAR (Effective Annual Rate) for any frequency.
Compound Interest Conversion Formula
EAR (Effective Annual Rate):
EAR = (1 + r/n)^n − 1
Where r = nominal annual rate, n = compounding periods/year
Convert to target frequency m:
Equivalent rate per period = (1 + EAR)^(1/m) − 1
Nominal annual rate = m × [(1 + EAR)^(1/m) − 1]
Continuous compounding:
EAR = e^r − 1
Equivalent continuous rate = ln(1 + EAR)
Worked Example: 10% p.a. annual → equivalent monthly rate:
EAR = (1 + 0.10/1)^1 − 1 = 10%
Monthly rate = (1.10)^(1/12) − 1 = 0.7974% per month
Annualised = 0.7974% × 12 = 9.569% p.a. (nominal monthly)
Frequently Asked Questions
Why does the monthly equivalent rate seem lower than annual rate?
10% p.a. annual compounding gives ₹1,61,051 on ₹1L over 5 years. To get the same result with monthly compounding, you only need 9.569% p.a. (nominal) because the more frequent compounding makes up the difference. The EAR (10%) is the same in both cases — it’s the standard for comparison.
When is this converter useful in real life?
Banks often quote interest rates differently: home loans at 8.5% p.a. (monthly reducing), credit cards at 3% per month (= 42.57% EAR!), FDs at 7% p.a. compounded quarterly. This converter lets you compare apples to apples by converting all rates to the same EAR basis.