How much interest??

rob78

Can someone tell me please, if i have an account with an interest rate of 6% gross and 5.75aer, over a year how much interest will I actually recieve if it is paid yearly?

Is it £10,000 x 6% = 600
or
£10,000 x 5.75% = 575

Thanks

Aegis

The AER is what you'll get if you keep all your interest in the account so that it can compound. However, that figure will be before tax.

I don't quite understand how you have an account with a lower AER than the gross rate though...

YorkshireBoy

Aegis wrote: »

I don't quite understand how you have an account with a lower AER than the gross rate though...

The account will have a bonus for x months.

Aegis

Ahh, that makes a lot of sense! Thanks.

rob78

Yes it does have a bonus rate until May I think. So how much interest will I actually recieve if I keep 10k at this rate for the whole year?

Milarky

Assuming the bonus rate period is six months (you don't say how many) @ 6% then it must drop to 5.5% for the second period. The interest won't be paid and compounded mid year (as you say) so you just earn 3% then 2.75% - 5.75% gross - after 12 months [big] if rates stay the same of course and that makes saying you'll get £575 a bit dishonest