I'm a bit confused, as usual

glitterygert

I was just reading another post about the Alliance and Leicester Esaver, so went on the site to have a look, I've underlined the bit I'm confused about.

Interest earned every month that no withdrawal is made. In a month in which a withdrawal is made, no interest is earned on the account balance (except in July, when withdrawals are allowed without loss of interest). The AER will be lower if you withdraw.

I understand the bit about not getting the interest in the month you withdraw.

Swipe

They are just stating the obvious, that's all. In that by getting penalised by making a withdrawal (excluding July) affects the overall AER

Baldur

AER is a notional value of the interest earned if you keep all of your funds in the account for the full year.

If you withdraw funds and, therefore, don't earn interest for that month, it's impossible to achieve the AER, as you are only being paid interest for 11 months instead of twelve, etc.

anna42hmr

AER means “annual equivalent rate”. which is interest you will have received by the end of the year taking into account the regularity of which interest is added to the account (as some pay monthly and some pay annually)

basically in this case the interest rate aer assumes that is the interest percentage, for arguments sake if the interes aer is 6.5% over the year, thats the interest rate you receive, however if you have months in which you withdraw, and as a result you get no interest,

as there is no interest for that month the annual equivilent rate reduces ie 12 months money you earn 6.5% however if for example you withdraw twice in the year, that means for 2 months you will earn no interest, therefore the aer is reduce, and you will not get the full aer as you will only earn interest for a certain number of months (in this example 10 month) and not the 12 that the aer is calculated on

glitterygert

thank you, especially to anna42hmr very well explained, to be honest I'm not very up on AER's and things, so and was probably obvious to others,I have brain fog tonight?

anna42hmr

glitterygert wrote: »

thank you, especially to anna42hmr very well explained, to be honest I'm not very up on AER's and things, so and was probably obvious to others,I have brain fog tonight?

beleive me your not the only one to find these confusing, i had to get my dad to explain it to me years ago a few times, but its now kinda stuck in my head