Apr / Aer

barryjohnsmith

Can anyone explain how APR can be compared to AER, or are they both the same thing?

My credit card debt is on 5.9% for life offer, but I'm wondering whether I should use my overdraft (charged at 8.9% AER) to pay off some of the debt.

Cheers

Barry.

Rafter

Barry

AER is the Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded on an annual basis and is usually used for savings accounts.

APR is the Annual Percentage rate is more usually used for loan, mortgage and credit card products over their term or in the case of credit cards over 12 months assuming a purchase of £1500 paid off in 12 equal installments!

So, Stick with your credit card offer unless you can find a lower AER or APR source of borrowing. If you want the security of a 'for life' deal, try applying for the 3.9% Texaco card. You could just beat it using a Northern Rock or Barclaycard loan at 5.7% but these are difficult to get, have early repayment penalties and the saving would be tiny each month.

Good luck.

R.