Hi guys! I'm not a native speaker and no numbers wizz so please bear with me as I try to clarify my problem...

Short version: how to calculate the "true" yearly interest rate of a loan which includes monthly interest-on-interest effect vs. savingsaccount that only includes interest on a once-a-year basis?

Long version: I recently discovered that my student loan's interest rate is calculated differently than the interest I receive on my savings account. SL's interest: 0.81%, savings interest: 1.30%. That seemed like a relatively profitable interest difference. But.... the interest on the SLs is added to the principal every month (when no payment is done). The given rate of 0.81% is the annual interest rate (luckily). However, because of the interest-on-interest effect of the loan calculation, the effective annual interest might exceed the annual interest I receive on the savings account.

To determine the right course of action, I'd like to calculate whether it's wiser to save up the SL money and keep it in the savings account for as long as possible, or if I'd better pay it back as soon as possible if the current situation is costing me extra every month.

I have some excell skills (IF functions, basic calculations and statistics), however I'm not experienced with the financial formulas enough for this. I know there are excell experts out there for whom this is child's play. I'd really like to discover this stuff, so.... please help me learn to run the numbers myself. Any tips or tricks are very welcome. I hope I made the issue clear enough for you to do so, but if not than please let me know so I can elaborate!

Thanks in advance!