Assume that the return period of a financial product is year a and the rate of return is b, then the annualized interest rate is r, r=(1 b)^a-1. Annual interest rate: annual interest ÷ principal × 100. For example: if you deposit 1 million in the bank, the interest will be 20,000 per year. The annual interest rate is 2.45 ÷ 100 × 100 = 2.45. The annualized interest rate is mainly used for deposits and loans.