AER: Who understands it?

[groucho]

I've been looking at bank sites on the net. They all say you get x amount p.a/aer. I know p.a. will be per annum but what does AER mean?
Let's say I put 10k in an account and never added to it within the year, how much would there be in there at 5% aer after a year?

[mybrainhurts]

These people know....

Apparently....

[anonymous-user]

Annual Equivalent Rate.

I think it is a way of saying how much you would receive over a year.

eg. imagine you have a monthly paying account at 5.50% and you have your interest reinvested. You will get interest on your reinvested interest.

Over the year you would get an AER of Say 6%.

If you took the interest out, you would only get a rate of 5.50%