What is AER?

Last checked: 14 October 2026. We check this page regularly against official sources.

AER means annual equivalent rate. It answers a simple question: if you left the money in for a year, and left the interest in the account, what rate would that be as a single yearly figure?

Banks also quote a gross rate. Gross is the rate before tax and before compounding is rolled into a yearly number. When interest is paid once a year, AER and gross are usually the same. When interest is paid every month, a bit of interest starts earning interest of its own. AER is then slightly higher than the monthly gross rate. That is why a monthly account at 4.50% gross can show about 4.59% AER.

Why ClearRates sorts on AER

Sorting on the gross rate would make a monthly account look worse than an annual account paying the same AER. AER is the fairer comparison, so the tables use it. The gross rate is still on the account page, because tax is charged on interest you actually receive, which is closer to the gross figure than to AER.

Bonuses

Some easy-access accounts add a bonus for a few months. The big number on the marketing page often includes that bonus. After it ends, the rate drops to an underlying rate that can be much lower. On ClearRates the bonus, the end date and the underlying rate are separate fields. A row marked “Ends soon” has a bonus that runs out within 60 days.

Fixed, variable and tracker

A fixed rate stays the same for the term, and you usually cannot take the money out early. A variable rate can change. A tracker moves with Bank Rate by a set margin. The account page says which one you are looking at.

The “earns about” line

Every rate card shows what a balance earns in a year. The default balance is £5,000. Change the amount in the search and the figure follows. The sum is:

£5,000

amount × AER ÷ 100, rounded to the nearest pound

It is labelled “about” on purpose. It does not model the day you pay the money in, or a bonus that ends mid-year. A regular saver is worked out separately. The account page, the rate card and the newsletter use the same illustration: the gross rate, and how often the provider pays interest. When interest is paid once a year, each monthly payment earns simple interest for the months left in the term. On a 12-month account that is about 6.5 months on average. When interest is paid monthly, the illustration compounds each month. The figure is in pounds and pence. Under £1 it is shown as pence, such as 52p.

Turn on a tax band and the results also show an after-tax illustration. That uses the gross rate, then takes off tax on interest above the Personal Savings Allowance. ISA interest is left untaxed. None of this is your tax return. It is a way to see when a tax-free account overtakes a higher taxable rate.

What AER is not

AER is not a guarantee that the rate will last a year, unless the account is fixed. It is not a promise of what you will be paid if you withdraw early. It is not financial advice. A listed rate on ClearRates is a figure checked against the provider. Variable rates can still change.

Questions

Is AER the same as the gross rate?

Not always. If interest is paid once a year they are usually the same. If interest is paid monthly or quarterly and left in the account, AER is a little higher because of compounding.

Does AER include a bonus?

The headline AER often includes a temporary bonus. ClearRates stores the bonus and the underlying rate separately so the rate after the bonus ends is visible.

Is the earns-about figure a quote?

No. It is amount times AER for one year, rounded to the nearest pound. It ignores tax unless you turn on a tax band, and it is not a promise from a bank.