# EAR (Effective Annual Rate)

*Borrowing & Credit — Finicade finance glossary*

The true yearly rate once compounding within the year is counted — so a card quoting 2% a month is really about 27% a year, not 24%. It's the honest number for comparing rates that compound at different frequencies.

**Also known as:** effective annual rate

**Related terms:** [APR (Annual Percentage Rate)](https://finicade.com/glossary/apr), [APY (Annual Percentage Yield)](https://finicade.com/glossary/apy), [Compounding Frequency](https://finicade.com/glossary/compounding-frequency)

**Taught in:** Charter Climb — Time Value of Money

Source: https://finicade.com/glossary/ear