AER stands for 'Annual Equivalent Rate' and represents your actual return each year.

The interest rate we apply to your money is called the gross rate. We calculate interest every day and it builds up until we pay it into your account once a month. This allows you to benefit from compound interest, which is where your interest also starts to earn interest, so each month you'll earn slightly more than the last one. The AER takes this into account and is why it’s a little bit higher than the gross rate.

Savings accounts can work slightly differently between providers and is why AER exists as it provides a standardised way to compare them easily

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