exactly
APR to APY toggle
We only display interest rates in APR format, which can confuse some users who are more familiar with the APY form.
It would be nice to have a feature that allows users to switch between APR and APY formats for displaying interest rates. This will allow users to view interest rates in the form they are most comfortable with.
The formula to convert APR (annual percentage rate) to APY (annual percentage yield) is as follows:
APY = (1 + (\frac{APR}{n}))^n - 1
where:
-
APRis the annual percentage rate (e.g. 0.05 for 5%) -
nis the number of times the interest is compounded per year
This formula accounts for the effect of compounding on the overall yield of the investment. The number of times the interest is compounded per year is an important factor, as it determines how often the interest is added to the principal, which in turn affects the overall yield of the investment.
It's important to note that the APR and APY are not always the same. APR measures the cost of credit on a yearly basis. However, APY takes into account the effect of compounding, and as such, it takes in consideration the frequency of the compounding. This makes APY a better metric to compare different accounts with different compounding frequencies.
