Glossary · Savings

AER (Annual Equivalent Rate)

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Content updated: 26 May 2026

By the Money Guide editorial team · Editorial responsibility: Kaiser Khan, Editorial Director · How we check facts

Definition: The interest rate on a savings account as if interest were paid and compounded once a year — used to compare accounts on a like-for-like basis.

AER normalises advertised savings rates by assuming all interest is reinvested, regardless of whether the account pays monthly, quarterly or annually. Banks are required by the FCA to quote AER on savings products.

Primary source: legislation.gov.uk/ukpga/2000/8

More Savings terms

Cash ISA
ISA (Individual Savings Account)
ISA allowance
Junior ISA
Lifetime ISA (LISA)
NS&I (National Savings & Investments)

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