AER question

sam63

I am looking to put some money into a savings account that pays me a monthly income. It will be in for less than a year. I am trying to compare like for like accounts. NS&I quote their interest rates as pa (per annum I am assuming). Is this the same as AER? Are AER and Gross the same? As a standard rate tax payer I am assuming I will have to take 20% off the figure. I have searched this site and can find very little about monthly income accounts so any help would be greatly appreciated.

Thanks all,

Sam.

Lokolo

Yes that is correct.

Basically with monthly paying accounts, you will have figures such as:

6.08% Gross
6.25% AER

As the AER counts compound interest, as though you leave the interest in the account to gain.

However as yearly accounts mean interest is only paid once the gross and AER will always be the same.

sam63

Thanks for the reply, so when NS&I call their interest rate 'pa', it is the same as the AER yes?

Lokolo

sam63 wrote: »

Thanks for the reply, so when NS&I call their interest rate 'pa', it is the same as the AER yes?

Yes thats right.