is it better to have a higher ear 
it is better for savers investors to have a higher ear though it is worse for borrowers to have a higher ear in either situation the ear will likely be higher than the nominal rate it may be more strategic to understand how the ear has changed in recent history and what future trends look like when evaluating future transactions the bottom linebanks and other financial institutions typically advertise their money market rates using the nominal interest rate which does not consider fees or compounding the effective annual interest rate does take compounding into account and results in a higher rate than the nominal the more compounding periods there are the higher the ultimate effective interest rate the higher the effective annual interest rate is the better it is for savers investors but worse for borrowers when comparing interest rates on a deposit or a loan consumers should pay attention to the effective annual interest rate not the headline grabbing nominal interest rate 