Comparing gross vs AER

dont_use_vistaprint

I have a Leeds online instant access paying 5.1% annually. Is the AER therefore 5.1% - as it doesn’t state AER anywhere 

trying to work out the benefit of shifting a large amount to Monument 60 day at 5.15/5.27 AEV 

if interest is paid into the sane account I’d earn 5.27 vs 5.1 with Leeds is this correct ?

if interest is paid to a nominated account I’d earn 5.15% vs 5.1% is that also correct?

other than the different rates , account types, ease /speed of transfers in/out with Monument , Monument app , any other pros or cons you know of between the two 

Thanks! 

EthicsGradient

Have you already opened the Monument 60 day notice account? Because, although it's still listed on the MSE "best" pages, when you go to the Monument website, their notice accounts for new customers only go up to 45 day notice at 5.08% gross, 5.20% AER (their gross and AER figures are different because they pay interest monthly - to go from one to the other, you divide 0.0508 by 12, add 1 (getting 1.00423), then raise this to the power of 12, which gets you 1.052 - or a 5.2% increase over a year).

Yes, your understanding of the "into the same account"/"into a nominated (current) account" is correct.

I think the Leeds rate should be taken as "AER" - if an account only adds interest yearly, then AER and gross should be the same. Perhaps your account was the Issue 50? In which case, that link does say AER and gross are both 5.10%.

Ommbiance

I can't comment on Monument as a provider, but can help with the terminology / calculation part of your query.

If an account only adds interest annually, the AER (annual equivalent rate) and gross interest rate are the same. This appears to be the situation with your Leeds account.

If an account adds interest monthly, the gross rate is lower than the AER, because the account earns interest on interest ie compounds monthly, which will end up with the AER rate.

(In both situations interest is calculated daily)

So yes, you are correct in what you state re. having the interest stay in or paid into a different account so either way you will be earning more, as long as you don't need instant access to the capital of course.

(NB You've put AEV in your post; did you mean AER?)