Question of the Week: What's the difference between APR and AER?

Former_MSE_Archna

Q. What's the difference between APR and AER?

A. Quite simply, APR is the official measure used for debt, AER is the same for savings.

The Annual Percentage Rate (APR) is the overall cost of the debt over a year, including any associated fees. The Annual Equivalent Rate (AER) shows you the interest you'd earn if you put your money in an account and left it there over a year.

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bobcurtis

As I understand it the above is correct, but the APR & AER figures were introduced to make it easier to compare accounts from different providers. They all have to use the same procedure to produce the figures, so we can immediately see the best value.

gozomark

OK, you win, that's the most boring QotW ever...

sabretoothtigger

but informative, I always suspected this was true now I know