Interest Rate Calculator: Solve for Your Real Rate

Discover the hidden numbers behind your loans and savings.

An interest rate is more than just a percentage; it is the price of money. Whether you are trying to figure out the APR on a private loan or the annual return on a vintage car you just sold, our Interest Rate Calculator helps you work backward from your results to find the annual percentage. This tool is essential for comparing competing offers that aren’t presented in the same format.

Simple vs. Effective Interest Rates

Not all rates are created equal. Depending on the frequency of compounding, a “6% rate” can result in different actual costs.¹

1. Nominal Interest Rate

This is the “advertised” rate. If you borrow $1,000 at a 10% nominal rate, the interest is calculated as $100 per year using simple interest.

Formula: I = P × r × t

2. Effective Annual Rate (EAR)

The EAR accounts for compounding within the year.² In the US and Canada, this is often referred to as the APY (Annual Percentage Yield).³ The more frequent the compounding (monthly vs. annually), the higher the EAR will be.⁴+2

Formula: EAR = (1 + i / n)ⁿ – 1 (where i is the nominal rate and n is the number of compounding periods)

Understanding APR vs. APY

On familyhealthcalc.com, we help you navigate regional terminology to ensure you aren’t overpaying:

• APR (Annual Percentage Rate): Used primarily for loans in the US and UK. It reflects the annual cost of borrowing including fees, but usually does not account for compounding within the year.⁹
• APY (Annual Percentage Yield): Used for savings and investments.¹⁰ It accounts for the “interest on interest” earned throughout the year.¹¹+1
• The Rule of Thumb: When borrowing, you want the lowest APR.¹² When saving, you want the highest APY.¹³