What is AER?

Published on
April 8, 2023

AER stands for Annual Equivalent Rate and represents how much interest you'd earn on an amount of money held in an account (like a Savings Vault) for an entire year, taking into account compound interest (the interest earned on interest). The AER allows you to compare the interest rates of different accounts regardless of when and how they pay interest.

For example, if you deposited N10,000 into savings vaults with an AER of 0.7%, this would mean you would have N10,000.38 on day 3 earning interest on interest).

Day 1: N10,000

Day 2: N10,000 + (N10,000 X 0.7%/365) = N10,000.19

Day 3: N10,000.19 + (N10,000.19 X 0.7%/365) = N10,000.38

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