Savings glossary

  • 1.
    AER

    AER stands for Annual Equivalent Rate. Whenever you see an advert for a savings account that shows an interest rate, you’ll see the AER. This means you can use the AER to compare accounts. It shows what the interest rate would be if your interest was paid and compounded once each year.

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  • 2.
    Annual interest

    Interest is paid on an annual basis.

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  • 3.
    Fixed rate

    A rate of interest that is fixed for a period of time.

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  • 4.
    Fixed term

    A period of time that money is saved for which is agreed on opening the account.

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  • 5.
    Gross

    Gross rate means that no tax will be automatically deducted from interest on your behalf. Depending on your personal circumstances, you may need to pay tax on the interest you earn and it will be your responsibility to pay any tax you may owe to HM Revenue and Customs (HMRC).

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  • 6.
    Interest rate

    This is the percentage return that you’ll receive on your savings. There are gross, and tax-free interest rates, depending on the account that you have.

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  • 7.
    Variable rate

    A rate of interest that may change over time.

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  • 8.
    Withdrawal

    When instructions are carried out to pay money out of your account (such as cash taken out of an account).

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