AER
AER stands for Annual Equivalent Rate.
1 min read Saving More Money
What it means
AER stands for Annual Equivalent Rate. It shows how much interest a savings account would pay over a year, taking compounding into account. It makes it easier to compare savings accounts.
Example
One account pays 4.5% AER and another pays 4.1% AER. The first is expected to pay more interest over a year if the rates stay the same.
Why it matters
AER helps you compare savings accounts on a like-for-like basis.
Banks and building societies use AER so customers can compare products more easily.
Is AER the same as the interest rate?
Not exactly. AER includes the effect of compound interest over a year.