What is the difference between a Nominal Annual Percentage Rate and an Annual Percentage Rate on the same account?
A "nominal rate" is one in which there is no compounding. As an example, if you had $1,000 invested and it paid you $90 of interest annually, the nominal rate would be 9%. This may also be referred to as a "coupon rate" for some investments.
This term may also be used in some credit transactions. Here is an example of how it is used in Regulation Z, for credit disclosures, "The annual percentage rate shall be the nominal annual percentage rate determined by multiplying the unit-period rate by the number of unit-periods in a year." In this case the APR is calculated based on the NAPR. In credit terms the APR is an expression of the cost of credit, as an annualized term.
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A "nominal rate" is one in which there is no compounding. As an example, if you had $1,000 invested and it paid you $90 of interest annually, the nominal rate would be 9%. This may also be referred to as a "coupon rate" for some investments. 