Real interest rate calculator
What does your interest rate really earn after inflation? Enter the rate and inflation to see the real rate and what your money will be worth in today's buying power. Free, no sign-up, nothing leaves your browser.
- 1Type in your own numbers
- 2The tool works it out
- 3See the answer clearly
Interest is added once a year and both rates stay the same each year. Tax and fees are left out. The starting numbers are only an example.
Nominal and real rates
The interest rate a bank or lender quotes is the nominal rate. The real interest rate is what is left after inflation: how much more your money can actually buy at the end. A quick estimate is the nominal rate minus inflation, so 5% interest with 3% inflation is about a 2% real return.
When real rates turn negative
If inflation is higher than the interest you earn, the real rate is negative. Your balance still grows in pounds, but it buys less than it did. For borrowers it works the other way: inflation shrinks the real cost of a fixed-rate debt over time.
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