Deposit offers show both a Nominal Gross Rate and an Annual Effective Rate (AER). These rates help you understand how interest is calculated and allow you to compare different deposit offers more easily.
Nominal Gross Rate
The Nominal Gross Rate is the annual interest rate (p.a.) paid by the partner bank.
It does not take into account:
How often interest is paid, or
Any compound interest effects.
It is a standard, mathematical rate and does not reflect interest paid during the term.
Annual Effective Rate (AER)
The AER shows the actual annual return, taking into account:
Interest paid during the term
The length of the deposit
How interest is calculated
This makes it easier to compare deposit products with different terms or interest payment schedules.
When is the AER higher than the Nominal Gross Rate?
The AER can be higher when:
Interest is paid more than once per year (for example, quarterly interest payments on easy access deposits)
The deposit term is less than one year, with interest projected over a full year
In these cases, compound interest increases the AER.
When are the AER and Nominal Gross Rate the same?
The AER and Nominal Gross Rate are usually the same for:
One-year fixed-term deposits with interest paid at maturity
Multi-year fixed-term deposits with annual interest payments to your Raisin Account
Easy access deposits with annual interest payments
In these cases, there is no compound interest effect.