What's the meaning of effective interest rate ？

Effective interest rate refers to the actual interest rate that is paid or earned on an investment or loan, taking into account all the fees, charges, and other costs associated with it. It is also known as the annual percentage rate (APR) and is calculated by considering the compounding of interest over a period of time. The effective interest rate is important because it helps investors and borrowers to compare different investment or loan options and choose the one that offers the best returns or lowest costs.