As of 13 August 2026, AI can explain the difference between AER and gross interest.
Most people should do this themselves; the prompt is on this page.
Can you do it?
2 minutesto a draft.
5 minutesto something you’d act on.
Cost, all in£0
Skill needednone
Who has to check ityou
What the alternative costsNo priced human alternative is supplied in the available tool data, and a purpose-built budgeting app is not needed for this basic explanation.
If this goes wrong: you misunderstand how the account pays interest, but you can correct the explanation against the bank's current terms before making a decision.
What to actually do
Do it yourself
The route this page recommends
A chat interface, no skill needed, and roughly 5 minutes until you can act on the result.
How to actually do it
- Open the bank or building society's current savings-account page and find the sections showing the AER, gross interest rate, payment frequency and whether the rate is fixed or variable.
- Copy the relevant account terms into the prompt, removing your account number, address and any other private information.
- Paste the complete prompt into a chatbot and ask it to explain the terms in plain English using the bank's wording where possible.
- Compare the explanation and any figures with the account page, checking that the chatbot has not treated an illustrative example as the bank's actual offer.
- Ask the chatbot to list any missing conditions, then return to the bank's terms or contact the bank to confirm those points before relying on the comparison.
Prompt
Explain the difference between AER and gross interest for someone in the UK who is comparing savings accounts. Define both terms in plain English, explain how compounding affects AER, and give a simple worked example using clearly labelled illustrative figures. Do not present the example as a current bank offer. Explain what I should look for in a bank's terms, including how often interest is paid and whether the rate is variable or fixed. If I paste account details below, use only those details, flag anything missing, and do not invent rates, dates, tax treatment or account conditions. End with a short checklist of what I should verify on the bank's website. Account details: [paste details here]
Open it prefilled in ChatGPT or Claude, or copy it into Gemini, which takes no prefill link.
Use a tool built for this
Second choiceHand it to a person
The distant thirdA person who owns the outcome does this end to end, worth it when the failure is dear.
What it gets wrong
- AI cannot know whether a bank has changed its rate or conditions unless you provide the current terms or check the bank's website yourself.
- AI cannot infer how often your specific account pays interest when the account documents do not say.
- AI can make an example sound like a definite payment, so the figures must be labelled as illustrative and checked against the account terms.
- AI cannot decide whether an account is suitable for your wider savings, tax or access needs.
Even on a YES, the friction has a name: context depth.
How we scored this
Five axes, each scored nought to two by hand: ten means AI carries the task cleanly, and the thresholds that turn a total into YES, PARTLY or NO are published in the methodology. Each axis name links to its definition.
| Axis | Score (0–2) |
|---|---|
| Output | 2 |
| Inputs | 2 |
| Verification | 2 |
| Liability | 2 |
| Effort delta | 2 |
| Total | 10 / 10 |
The methodology and its thresholds are published in full.
FAQ
- What is the difference between AER and gross interest?
- Gross interest is the interest rate before tax, usually stated without allowing for the effect of compounding. AER is the annual rate that shows what you could earn over a year if interest is added to the account and remains there, allowing you to compare savings accounts more consistently.
- Is AER higher than gross interest?
- AER can be higher than the gross rate when interest is added more than once a year and the interest itself earns interest. If interest is paid once a year, the two rates may be the same, subject to the account's terms.
- Which rate should I use to compare savings accounts?
- Use AER as the main comparison rate because it accounts for the effect of compounding. Still check the gross rate, when interest is paid, whether the rate is fixed or variable, and any account conditions on the bank's website.
- Does AER tell me exactly how much interest I will get?
- No. Your actual interest depends on your balance, deposits and withdrawals, the time your money remains in the account, and whether the rate changes. Check the account's current terms rather than treating AER as a fixed payment.
Nearby answers
- Can AI help me assess my investment risk level?PARTLY
- Can AI calculate compound interest on my savings?YES
- Can AI calculate how much interest I will earn from an AER?YES
- Can AI check whether I owe UK Capital Gains Tax on my investments?PARTLY
- Can AI check whether my UK savings are covered by FSCS protection?PARTLY
- Can AI check whether a Lifetime ISA suits me?PARTLY
Assessed by gpt-5.6-luna (gpt-5.6-luna) on 2026-08-13, second-checked by an independent model. Wrong somewhere? Email [email protected] and it gets re-checked.
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