AER vs APR: the two rates everyone mixes up
4% AER, 24.9% APR. Same letters, opposite sides of the deal.
The simple version
AER (annual equivalent rate) is what savings pay you in a year, including interest on interest. APR (annual percentage rate) is what borrowing costs you in a year, including fees.
What an AER actually earns you in a year.
After 1 year
£2,262
Interest earned
£62
Watch out
Some 'regular saver' accounts show a high AER, but you only pay in a little each month, so you earn much less than it looks.
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Key takeaway
AER = money you earn. APR = money you pay. Compare like with like.
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