Financial Tool

Equivalent Interest Rate

Find the matching interest rate when changing from one compounding frequency to another.

Equivalent Rate
5.1162%

Σ The Formula

r2 = n2 × [ (1 + r1/n1)^(n1/n2) - 1 ]

Real World Examples

Monthly to Annual
6% compounded monthly is equivalent to 6.167% compounded annually.
Daily to Monthly
12% compounded daily is equivalent to 12.06% compounded monthly.

# About This Calculator

The Equivalent Interest Rate Calculator allows you to compare two different interest rates with different compounding frequencies. Two rates are "equivalent" if they yield the same amount of interest at the end of the same period.

This is vital for financial planning when comparing loans or investment products that utilize different terms, such as a credit card (compounded daily) vs. a savings account (compounded monthly).

How To Use

  1. Enter the **Known Interest Rate** (%).
  2. Select its **Current Compounding** frequency.
  3. Select the **Target Compounding** frequency you want to find the equivalent for.
  4. The result shows what the rate would need to be in the new frequency to be identical.

Frequently Asked Questions

Why do I need an equivalent rate?+

When comparing two different financial products, they often use different compounding rules. Converting them to a common frequency (like annual) lets you compare 'apples to apples'.

Is this the same as the Effective Rate?+

An Effective Rate is a specific type of equivalent rate where the target frequency is always Annual (once per year).

Is Equivalent Interest Rate free to use?+

Yes, Equivalent Interest Rate on Matheric is completely free to use. We believe in accessible education and utility for everyone.

How accurate is Equivalent Interest Rate?+

We use standard mathematical formulas and high-precision computing algorithms to ensure results for Equivalent Interest Rate are accurate for academic and professional use.

Can I use Equivalent Interest Rate on my phone?+

Yes! Equivalent Interest Rate is fully responsive and optimized for all devices, including smartphones, tablets, and desktops.

Do you save my data?+

No. We prioritize your privacy. All calculations are performed in your browser or temporarily processed, and we do not store your personal input data.

About

The Equivalent Interest Rate Calculator allows you to compare two different interest rates with different compounding frequencies. Two rates are "equivalent" if they yield the same amount of interest at the end of the same period.

This is vital for financial planning when comparing loans or investment products that utilize different terms, such as a credit card (compounded daily) vs. a savings account (compounded monthly).

Related Tools

Percentage Calculator

Percentage Change

Discount Calculator

Tip Calculator