The interest you earn on the money you keep in your bank account is also known as savings interest.
When you open a bank account, the bank will let you know how much interest you will earn on your money. Make sure you remember this!
There are a few things that have an impact on the amount of interest you will make on your money.
- If the money is taxable
- How much you pay in
- How often interest is paid to you
Your bank will tell you the amount of interest they will pay you by using either the Gross Interest Rate or the Net Interest Rate.
Now, AER otherwise known as the Annual Equivalent Rate is the actual interest rate you will pay before tax. It will be lower after tax if you don’t use an ISA savings account.