Interest can be compounded at different frequencies — annually, semi-annually, quarterly, monthly, daily, or continuously. A nominal rate compounded more frequently produces a higher effective annual return than the same nominal rate compounded less frequently.
This calculator converts a rate at one compounding frequency into the equivalent rate at another, using the Effective Annual Rate (EAR) as the common comparison point. For example, 6% compounded monthly is equivalent to about 6.17% compounded annually.