Real Interest Rate Calculator

Real interest rate shows the true cost of borrowing or true gain from lending after accounting for inflation.

The Fisher equation calculates real rate precisely: (1 + nominal) / (1 + inflation) - 1.

Simple approximation (nominal - inflation) works well for low rates but becomes less accurate at high rates.

During high inflation, seemingly high nominal rates may actually represent low or negative real rates.

Central banks adjust nominal interest rates to influence real rates and control economic growth.

Negative real interest rates mean borrowers benefit while savers lose purchasing power over time.

Fixed-rate loans become more attractive when real rates are expected to rise due to falling inflation.

Variable-rate loans may be better when real rates are expected to fall due to rising inflation.

Real interest rates affect currency values - higher real rates typically strengthen a currency.

Long-term financial planning requires focusing on real rates, not just nominal rates, to preserve wealth.