AER (Annual Equivalent Rate)
AER is used to describe the interest rate a consumer will be paid by the bank on the money in they have in their account when in credit by the end of the year. AER takes into account the interest rate and the regularity of payments, and lets consumers compare interest rates on the same terms for each bank account.
APR (Annual Percentage Rate)
APR is used to describe the true cost of borrowing money (loans, credit cards, mortgages) by taking into account the interest rate, when it is charged and any other fees or costs. APR lets consumers compare borrowing rates on the same terms from each provider.
APR Typical Variable
APR Typical Variable is used to describe the estimated/average APR a consumer is likely to be able to obtain depending on their credit rating, the amount of money borrowed, and the length of time of the loan.
APR Variable is used to describe the current APR, whilst noting that the interest rate and/or fees may fluctuate.
The Bank of England sets a Base Rate upon which many banks base their own Base Rates upon which they determine the interest rates they will charge consumers on their debt and pay consumers on their credit.
When using a credit card a consumer is borrowing money from a bank to make a purchase. The money is therefore similar to an on-demand loan, which the consumer then has to pay back the bank. Interest rates tend to be higher than of consumer loans, but due to consumer protective legislation credit cards tend to offer better security on internet purchases than debit cards.
Current accounts offer consumers easy access to their money through cashpoints (ATMs), debit cards, online and phone banking as well as in branch. They tend to pay very low interest rates on credit in the accounts, but consumers can quickly access all their money 24/7, and the accounts often come with overdraft facilities. Student accounts are a type of current account designed specifically at students.
When using a debit card a consumer is making a purchase with money taken directly from their own bank account. Most consumer current accounts come with debit cards (most often Visa or Mastercard) to allow consumers to pay for goods without cash such as on the internet.
EAR (Equivalent Annual Rate)
EAR is used to show the true cost of the of the account if the overdraft facility is used taking into account the internet rate, when it is charged and any other fees or costs. EAR lets consumers compare rates on bank accounts with overdraft facilities on the same terms from each provider.
On a loan consumers pay the bank interest on the amount of money they borrowed over the length of the loan, with the interest described as APR or AER. When the consumer is in credit the bank may pay them interest described as EAR on the amount of money in their account depending on the type of account.
Many current accounts come with overdraft facilities, which offer consumers the ability to borrow an agreed amount on-demand, with interest payable on that borrowing. Most student accounts offer students an interest-free overdraft, which is similar to an interest free loan, allowing student to borrow and agreed amount of money without paying interest for the duration of their university course. Penalties can be substantial if consumers borrow over their overdraft.
Savings accounts offer consumers better interest rates on their savings than current accounts, but often have limits on how quickly and how much money a consumer can transfer or withdraw from the account in a specified period. Savings accounts tend not to have a debit card for access to the money, so to take money out of the account the consumer must use internet or phone banking facilities or go into a branch. Overdrafts are not generally available on savings accounts.