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Gross rate is the contractual rate of interest payable before the deduction of income tax at the rate specified by law. In other words, the figure you see is the rate that will be used to work out the interest you’ll be paid before income tax is taken off.
Tax free is the contractual rate of interest payable where interest is exempt from income tax. In other words, you won’t have to pay income tax on any interest you’re paid from this product.
AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year.
So what’s compounded interest? Each day you’ll earn interest on whatever is in your account. So, come the next day and so on, you’ll not only have earned interest on the original amount you deposited, but you also earn interest on the interest you earned previously.
As every advertisement for a savings product which quotes an interest rate will contain an AER, you will be able to compare more easily what return you can expect from your savings over time.
For important information about our product offers see legal information. |
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