Sometimes we have to use terms you might not be familiar with.
Below we’ve explained what they mean.
AER is short for Annual Equivalent Rate. You’ll see it on any savings accounts that pay interest, as a way of comparing between different banks’ accounts. The AER shows you what the rate would be yearly if we paid compound interest (which we do for Flexible Savings Pots).
You can get two types of interest: simple and compound. Simple interest means you only earn interest on the original amount you saved, which is how Fixed Savings Pots work. So if you initially save £1,000, you’ll only earn interest on £1,000 every month, even if the interest you’re earning increases how much you’ve got in your account. Compound interest means you’ll earn interest on the amount you saved and the interest you’re earning. So you earn more over time because the amount you’re earning interest on goes up. You’ll earn compound interest on any money you have in a Flexible Savings Pot.
Gross interest is the annual rate of interest you’ll get before any taxes or other charges are deducted. It’s usually shown as a percentage.