When choosing a savings account, you’ll want to earn as much interest on your deposits as possible. Understanding the different types of interest rates and what they mean for your savings will help you effectively compare savings account rates and maximise the return on your savings account deposits. On this page, we’ll explain what gross interest is, and the difference between gross interest, net interest and the Annual Equivalent Raterate (AER). 

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What is interest?

Interest is either what you earn from your savings or what you’re charged on money you’ve borrowed. Interest rates are typically expressed as an annual percentage.

What does gross interest mean?

Gross interest is the annual rate of interest you earn from an investment or savings account before tax, or other bank charges are deducted.


What's the difference between gross and net savings interest?

Net savings interest is the interest you’ll earn after tax is deducted from the gross interest rate. That’s the difference; the gross interest rate doesn’t consider any tax you may need to pay on your savings, the net savings interest rate is that gross rate with the tax removed.

How does tax affect the gross interest rate?

Tax isn’t factored into the gross interest rate, but it is factored into the net savings interest rate, which deducts what you would need to pay in tax.

Is the gross interest rate the same as AER?

No, the gross interest rate and AER aren’t the same, but they can look the same. Gross interest is the rate you’ll earn when you first open a savings account. AER shows how much interest you’ll earn over the course of a whole year. The percentage could look the same, but the actual amount of interest you’ll earn will be different.

The AER  makes it easier to compare the interest rates of savings accounts offered by different financial institutions because it takes compound interest into account. The gross interest rate doesn’t take compound interest into account and is just a flat rate of interest.

It is important to keep in mind that although they may seem similar, you should always compare like for like rather than comparing gross interest and AER against each other.

What are the best interest rates currently available at Raisin UK?

The best interest rates in our marketplace are subject to change. Typically, longer-term fixed rate bonds offer the best rates, but notice accounts can offer competitive variable interest rates. It’s important to read the details of a savings account before opening it to ensure that as well as receiving the best interest rate, the account is right for you.

Currently, the best variable interest rate on our marketplace for a notice account is 0.55% AER, while the highest interest you can earn from a fixed rate bond from our partner banks is 0.95% AER.

To find the best savings account for you, register for a Raisin UK Account and log in to apply.

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