ParNominal vs effective interest rates
A nominal rate is the rate per period times the number of periods in a year. An effective rate also counts interest earned on interest within the year.
APR and APY
Loans quote an APR: a nominal rate, the monthly rate times 12. Savings accounts quote an APY: an effective rate. At 6% compounded monthly, the APR is 6% but the APY is about 6.17%, because interest earned in January earns interest itself for the rest of the year.
Which to use on the calculator
For monthly payments, divide the nominal rate by 12 with g12÷i. Don’t use the effective rate there. When comparing offers with different compounding, convert each to an effective rate first.