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AER: Annual Equivalent Rate
Rate that is quoted on the interest paid on savings and investments.
The AER provides the depositor with a true rate of return, taking account of how often interest is credited to their account during a 12-month period, and shows what the return will be if the interest is compounded and paid annually, instead of quarterly or monthly.
AER is pertinent when interest is left to roll-over in the account for the whole period; if the depositor draws money out, it will no longer be meaningful. It is usually quoted gross, meaning before any tax is deducted.