Calculating rates

By THIS IS MONEY
Updated:

 

WHAT is the difference between APR and AER? Is there a formula available so that you can compare like-for-like quoted rates? PS, London.

Sandra Quinn at Apacs says: The APR is the annual percentage rate of charge which applies to loans, credit cards and mortgages and there is one formula for it which has a legal basis, with one specific way of being calculated.

The AER is the annual equivalent rate which is often used for savings products to specify what annual interest rate you are receiving on products.

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