What is AER% and what does it have to do with my savings account?

The Annual Equivalent Rate (AER) is a rate that accounts for compounding (the interest earned on interest) over a given year. AER is an industry standard rate that allows you to easily compare rates from different banks, even if the interest is calculated and paid out differently. Let's take a look at how much interest you could generate with an AER of 4.91% over 12 months.

Account Balance 12 Months Earn Intrest Balance After 12 Months
£1000 £49.10 £1,049.10
£10,000 £491 £10,491.00
£85,00 £4,173.50 £89,173.50
£250,000 £12,275 £262,275

This is for illustrative purposes and not based on individual circumstances. It assumes that you don’t deposit or withdraw any money, and that there was no change to the interest rate over 12 months.

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