My bank gives me interest in apr on savings

jimsbeast

hello, i have recently been comparing savings rates and thinking about switching isas and savings accounts to get the best deal, but i dont understand the interest rate my bank offers, when i research on here and on my banks home website they list their interest rate in AER but when i search on google there is no reference anywhere to savings interest being quoted as APR the long and short of it is, my bank says on their home page my isa earns 2.00 AER interest, if i switched to a top rate isa from MSE i could earn 2.5 AER but when i log into my account on the banks website and click interest rate it says 3.7APR thats why i have stayed with my bank for so long because they appear the best, all of my savings accounts with this bank are listed in this APR form
i dont know what the true rate is
please help!!!!!
thanks very much
james

Vortigern

Annual Effective Rate and Annual Percentage Rate are normally the same on ISAs, unless the interest is paid monthly. The best way to find the true rate is to ask your bank. Alternatively if you tell us which bank, what the account is called and when you took it out, we might be able to guess

psychic_teabag

See Martin's guide to interest rates at http://www.moneysavingexpert.com/banking/interest-rates

He says APR is the official rate when comparing borrowing interst rates, rather than savings interest rates. Are you sure you are looking up the correct sort of interest rate ?

Which bank is it ? Can you give us the url you are looking at for their interest rates?

jimsbeast

hi thanks for your reply
its lloyds
in my account it says i earn 3.7 APR
on their home page the same account it says earns 2.2 AER

my esavings account earns 2.5 APR
on the home page they say the same account earns 1.5 AER

thanks
james

jimsbeast

basically when i am logged into internet banking there is a tab which says "interest rates"
there is listed all of my accounts, and their interest rates all in APR
but on the banks homepage all of the interest rates are listed in AER and are much lower
ive never seen savings rates listed in APR before,
but for years its lead me to believe im getting the best rates

Lokolo

They won't be the exact same account. They could have a bonus for the first X months. They could be different issues of accounts.

The one in your account will be correct.

jimsbeast

hi thats very interesting thanks, this means i wont be switching my savings accounts, i have never changed or switched just always stuck with lloyds and none of my accounts have a bonus on them, i just dont understand why my interest is so high, higher than anything on MSE and higher than any introductory rates my bank offers to new customers
thanks again
james

Vortigern

jimsbeast wrote: »

my esavings account earns 2.5 APR
on the home page they say the same account earns 1.5 AER

That 1.5% is for new customers only. The interest for your eSavings account can be found if you dig a little deeper and look for previous rates.

Old rates

This suggests you might have an eSavings account with 12 month bonus - Accounts opened from 14th Feb 2011 - 28th Sept 2012 earn 2.5%AER on balances over £10,000. Includes a 1.5% bonus for the first 12 months since account opening.

psychic_teabag

Ok, sure enough, on my Lloyds esaver it shows the rate as an APR rather than an AER. I hadn't noticed that before.

They were doing an offer for 4% on current accounts a while back, but my current account doesn't have the button to show the current interest rate, so I guess it's not one of those.

I'd be inclined to trust the rate that's reported by online banking for your account. It should be personalised, whereas any rates shown on the generic web page will be for new customers. Rates have fallen quite dramatically recently, so it's quite likely an existing account you have will have a higher rate.

Is it a fixed-rate account ? 3.7 is quite high for instant-access even when rates were higher than they are now. On the web page, they're offering 2.2% for a 2-year ISA, or 2.25% for a 2-year fixed bond. So I'm guessing you have one of those. 3.7% sounds plausible for a 2-year fixed account opened more than, say, 6 months ago.
If it is fixed term, you probably couldn't move your money even if you wanted to.

jimsbeast

hi, thats great news, thanks yes the 3.7 percent is for my 2 year fixed isa so that makes sense, also i checked the esavings and i opened it just less than 12 months ago, not years ago as i had thought, and does include the bonus, i have older ones sitting empty offering 0.something
i had just always assumed that being a boring customer who doesnt search for new deals or switch savings that my bank must be taking advantage of me, but it actually seems the opposite and sometimes staying in the same place can be a good thing
i also have the advantage saver on my current account where i get 4 percent on under 7k
thanks again for your help

innovate

I suggest you check for how long you get 3.7% on your ISA because this was the fixed rate for a 2-year term, roughly about 12 months ago. So it may last for another 12 months, may be less, before it plummets.

Also, Lloyds Vantage hasn't paid 4% in years on £7K. There was an offer last October for 4% on balances between £3K and £6K, limited to 1 year, provided there are 2 DDs on the account. Other Vantage accounts get 3% on balances between £3K and £5K. So it might be worth you checking out what you really get.