Glossary

Effective Interest Rate (EIR)

DEFINITION

Effective Interest Rate, or EIR, is the actual annual rate of return on a savings account or interest-bearing investment after including the effect of compounding over time.

ELI5

If interest gets added again and again during the year, EIR shows the real yearly growth after counting that extra boost from compounding.

Other related terms

Non-participating (non-par) Life Insurance

Learn more

Mutual Fund

Learn more

Mortgage Equity Withdrawal Loans

Learn more

Robo Funds

Learn more