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What is AER?

AER stands for Annual Equivalent Rate and represents how much interest you would earn on an amount of money held in an account (like a Savings Vault) for an entire year, taking into account compound interest (the interest earned on interest). This allows you to compare the interest rates of different accounts regardless of when and how they pay interest. An AER may be rounded to the nearest decimal point.

For example, if you deposited £1,000 into a Savings Vault with an AER of 1.05%, your unrounded interest rate may be 1.04%. This would mean you would have £1,010.40 after a year:

t£1,000
£1,000*1.04%
------------------
=£1,010.40

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