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Monthly saving interest CONFUSED! help please!

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  • Lokolo wrote: »
    Yes it will. Thats why the AER is higher than the gross. It means the interest itself earns interest and over the year you earn 4.2% even though you have been getting 4.17% monthly. :)

    And you only get 4.2%/year from 4.17%/month if you are not a tax payer.

    For a tax payer it is lower because the monthly 4.17% amounts are added to the account after tax and there is less capital to attract the 4.17% interest than if it had been paid gross.
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