Real interest rate calculator
If inflation is above your account rate, your savings lose value even as the number goes up.
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How to use it
- Enter nominal interest rate and inflation rate.
- The result appears straight away and updates as you edit.
- Copy the result, or copy a link that keeps the same values to share it.
How it is calculated
Real rate = (1 + nominal) / (1 + inflation) − 1. Approximation: nominal − inflation.
Example
Inputs: Nominal interest rate = 5 %, Inflation rate = 3 %. Result: Real interest rate: 1.9417%; Simple approximation: 2%; Verdict: Your savings grow faster than inflation..
Limits and caveats
- Uses one-year rates; actual inflation may differ from what you expect.
- Tax on interest, which lowers the real return in some countries, is not deducted.
Questions about this tool
What is the Fisher equation?
It links nominal and real rates with inflation: (1 + nominal) = (1 + real) × (1 + inflation).
Why does the approximation differ?
Plain subtraction drops the product of the real rate and inflation, a gap that grows when rates are high.
Can the real rate be negative?
Yes. When inflation beats the interest rate, your money buys less each year.