Elvis Picardo is a regular contributor to Investopedia and has 25+ years of experience as a portfolio manager with diverse capital markets experience. Suzanne is a content marketer, writer, and ...

Paid non-client promotion: Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However ...

A real interest rate is the difference between a nominal interest rate and the rate of inflation. Nominal interest rates are the rates set by financial institutions, such as banks and credit card ...

But if you like a challenge, here we go. Here's the effective interest rate formula: 1 + (nominal interest rate / number of compounding periods)) ^ (number of compounding periods) – 1 Wait!