Click here to join our mailing list to receive the latest news and updates as they happen. Unsubscribe any time.

Effective Rate

The term “effective rate” is used in two ways. It can refer to:

  1. The actual rate that the borrower must pay on a loan after the effects of compounding are considered (This makes it different from the nominal interest rate.), and/or
  2. The rate that reflects the borrower’s actual borrowing cost, after accounting for any cash back that is received.

Partial source: CAAMP