What is AER in fixed deposit?

What is AER in fixed deposit?

Annual Equivalent Rate or AER is the rate of interest an investor gets for a fixed deposit for a year on a yearly basis. By definition, Annual Equivalent Rate or AER is a figure which shows what the interest rate on an account would be if interest was paid for a full year and compounded.

How do you calculate AER interest?

To calculate AER, divide the gross interest rate by the number of times per year that interest is paid on your account, and add one. You then increase the result to the number of times a year interest is paid. Subtract one from that result and you’ll be left with the AER.

What is AER vs APR?

A APR (annual percentage rate) is the annual rate of interest payable on mortgages, loans, credit cards and other credit products. AER (annual equivalent rate, although sometimes known as the annual effective rate) is usually used in savings accounts.

Is a higher AER better?

The annual equivalent rate (AER) will be higher than the stated or nominal rate if there is more than one compounding period a year. The annual equivalent rate (AER) is used to determine which banks offer better rates and which investments might be attractive.

Is Aer paid monthly?

Is AER Paid Monthly or Annually? Interest will be paid out in accordance with the agreement you’ve got with your bank.

Which bank is best for fixed deposit?

Fixed Deposit Interest Rates

Bank name Tenure Interest rate (%) per annum
IDFC Bank 91 days to 180 days 6.75
Kotak Mahindra Bank 181 to 363 days 6.5
SBI 180 to 210 days 6.35
Axis Bank 6 months to 8 months 29 days 6.25

What does AER mean on savings accounts?

Annual Equivalent Rate
AER or Annual Equivalent Rate shows what you would earn from different savings accounts over a year.

What is the difference between a current account and a savings account?

Know the difference between a Current Account and Savings Account. A savings account is a deposit account which allows limited transactions, while a Current Account is meant for daily transactions.

What is equivalent rate?

A rate is a type of ratio that compares two quantities that have different units of measurement. Different rates that have the same value are equivalent rates. You can find an equivalent rate the same way you find equivalent ratios—divide or multiply the numerator and the denominator by the same number.

Why do banks use AER?

The annual equivalent rate (AER) is used to determine which banks offer better rates and which investments might be attractive.

What is equivalent interest rate?

The annual equivalent rate (AER) is the interest rate for a savings account or investment product that has more than one compounding period. This method means that interest can be compounded several times in a year, depending on the number of times that interest payments are made.