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An investment's effective annual rate of interest is where compounding occurs more than once a year. The Effective Annual Rate Calculator allows you to access the best loans and investments by understanding the real effective annual rate that will apply throughout the financial agreement.

Have you ever invested in fixed deposits or taken a loan? Or you are planning to invest or get a loan for your present needs? You can save or earn a considerable amount of money on your investments or borrowings if you apply effective annual rate to them.

Effective annual rate is the interest rate, which is actually earned or paid due to the compounding over a particular period of time. It can be used to compare interest rates of different kind of products like, deposits, investments, loans, and line of credit, etc.

You may be a businessman or a salaried employee, we all want to save for our futures and sometimes need funds. Investments and loans are easily available in the market but it can be a tricky business. The good news is that the effective annual rate calculator is a powerful tool to help you decide your best option.

iCalculator has created an online calculator for your convenience to get the best deals available in the market. It is extremely user friendly and gives you details about several payment frequencies, like:

**Semiannually**- When only 2 payments are made in a year.**Quarterly**- When payments are done after every 3 months.**Monthly**- When you pay or receive payments monthly.**Daily**- Lastly, when the payments are made on a daily basis.

A regular rate of interest calculation in general is done annually, whereas a compounding period means the time frame after which the earned or payable interest is added to the principal amount on loans or investments. The compounding period can be semiannually, quarterly, or daily.

When you use the annual rate calculator you will notice that the more the frequency of compounding, the more interest is accumulated. Semiannual compounding earns more interest than annual, and quarterly compounding earns more interest than semiannually and so on.

Let's assume you are making an investment on 10% annual interest rate. You will end up with flat 10% at the end of the year whereas if you use the calculator, you will see that:

- You get 10.25% per year if it is paid twice a year.
- You get 10.381% per year if it is paid after every 3 months (quarterly).
- You get 10.471% per year if it is paid on a monthly basis.
- And you get 10.516% per year if the interest is being calculated on a daily basis

Same thing goes with calculation of loan payments, only that with loans you will be paying interest instead of receiving it. This makes it essential to know your effective annual rate so you can choose wisely to invest or borrow money from different banks or non-banking financial companies.

The effective annual interest rate is a useful way of evaluating the actual return on investment or payable interest on liabilities, both these factors can impact any company's profitability. A higher interest charged on its borrowings can affect the company's financial health, and a good effective annual rate on a company's investment can benefit the cash flow in the company, which will further help any business to grow more.

**Save or earn more**- It gives you a very clear picture when you input your details, which means if you opt for investment you will know how much you will earn after a year or if you borrow money from the bank you will know how much you actually have to pay.**It is easy to use**, can be accessed online, and gives detailed information, which means you save more time and money.**Choose from many options**- With the help of a calculator you can easily compare a variety of offers and there will be no surprises especially on loan payments when it comes to actually paying the installments.**Get the best deal**- When you know the details and you have a calculator handy to compare between the banks and even different offers within the same banks, you can be sure of getting the best deal possible.

When it comes to investing your hard earned money or taking a loan for your future projects it is essential to take good care, take your own time, do your own calculations, and be familiar with the market so you can make the best of your financial decisions.

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