APY, AER and APR: how interest rates are quoted in the US and UK
What APY, AER, gross rate and APR mean, how compounding changes the numbers, and how to compare rates on the same basis.
Quick answer
APY in the US and AER in the UK both show what savings earn over a year including compounding, so they are the figures to compare accounts on. The gross rate in the UK is the rate before compounding. APR, used for borrowing, combines the interest rate with the lender's fees. A savings rate and a loan rate are not comparable with each other.
Key points
- APY (US) and AER (UK) both include compounding, so they compare accounts that pay interest at different frequencies.
- UK gross rate is the rate before compounding; AER is slightly higher when interest is paid monthly.
- APR is for borrowing: the interest rate plus the lender's fees.
- Compare APY with APY, AER with AER, and APR with APR.
- A first-year bonus raises the AER for 12 months only.
- Variable rates can change; the date on a rate matters.
Interest rates are quoted in several ways, and the same account can show two different numbers. Knowing which one to compare saves you from mixing savings rates with loan rates, or a headline rate with a bonus.
Savings: APY and AER
APY (annual percentage yield) in the US and AER (annual equivalent rate) in the UK both express the interest earned over a year including compounding. They let you compare an account that pays monthly with one that pays yearly.
The UK also quotes a gross rate, which is the rate before compounding. On Zopa's savings page, the Access pot is 2.95% AER and 2.91% gross. The AER is higher because monthly interest itself earns interest.
Worked example
| Gross | Paid | AER | |
|---|---|---|---|
| Zopa Access pot | 2.91% | Monthly | 2.95% |
| Atom Instant Saver | 2.47% | Monthly | 2.50% |
On £10,000 for a year, 2.95% AER earns about £295.
Borrowing: APR
APR applies to loans and credit. The CFPB says the APR is "the interest rate plus any additional fees charged by the lender", and advises comparing "APRs to APRs and not APRs to interest rates" (CFPB). CreditStrong, for example, discloses an interest rate of 14.79% and an APR of 15.61% on its Instal loan, the difference reflecting charges beyond the interest rate.
What a headline rate can hide
- Tiers. CIT Bank pays 3.75% APY on $5,000 or more but 0.25% below.
- Bonuses. Chase Saver's 4.5% AER includes a 2.25% boost for 12 months; after that it is 2.25%.
- Withdrawal limits. Zopa's Limited Access pot drops to 2.00% after a fourth withdrawal in a year.
- Dates. Variable rates change. CIT dates its rate 1 July 2026; Ally dates its rate 28 October 2026.
Compare like with like
Compare APY with APY, AER with AER and APR with APR, and check the date and conditions on each. Our US savings comparison and UK comparison rank accounts on published rates, and the savings interest calculator works out interest for any balance and term.
Try the numbers
Savings interest calculator, with a page for each market in its own currency and at its own published prices.
The comparisons
Best easy-access savings accounts in the UK: rates read 29 October 2026
Eight UK savings accounts compared on the AER each provider published, how much of it is a first-year bonus, and the limits on withdrawals.
US editionBest high-yield savings accounts in the US: rates read 29 October 2026
Online savings accounts compared on the APY each bank published, the balance needed to earn it, and the date each rate was set.
Questions
What is the difference between APY and AER?
Very little in practice. Both show what interest would be over a year with compounding, so accounts paying monthly and yearly can be compared. APY is the US term and AER the UK term. Neither is a guarantee: variable rates can change.
Why is the AER higher than the gross rate?
Because of compounding. When interest is paid monthly, each payment starts earning interest too. Zopa’s Access pot, for example, quotes 2.95% AER and 2.91% gross. If interest is paid once a year, the AER and gross rate are the same.
What is APR?
The CFPB says the APR is the interest rate plus any additional fees charged by the lender. It is used for loans and credit, not savings. Because lenders must give it, it lets you compare loans on the same basis, as long as you compare APR with APR.
How do I work out interest from an AER or APY?
Over a full year, multiply the balance by the rate: £10,000 at 3.00% AER earns about £300. For other periods, the calculator compounds the rate for the number of months. Bonuses that end after 12 months need the lower rate after that.
Does a higher rate always mean more interest?
Not always. A tiered account may pay its headline rate only above a minimum, like CIT’s 3.75% on $5,000 or more and 0.25% below. A bonus may end after 12 months. Withdrawal limits can cut the rate. Check the conditions alongside the number.