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Interest rates

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  • 27-03-2007 4:32pm
    #1
    oisin_reme
    Registered Users Posts: 39 ✭


    hi can anybody tell me the difference (if there is one) between C.A.R. and A.E.R in terms of interest rates?

    Cheers:o


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    #2
    naitkris
    Closed Accounts Posts: 660 ✭✭✭naitkris


    i believe they are the same meaning, AER stands for Annual Equivalent Rate, and replaces, so i've read, CAR which stands for Compound Annual Rate, but means much the same as AER.


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    #3
    RaboDirect
    Closed Accounts Posts: 40 ✭RaboDirect


    naitkris wrote:
    i believe they are the same meaning, AER stands for Annual Equivalent Rate, and replaces, so i've read, CAR which stands for Compound Annual Rate, but means much the same as AER.

    Take a look at this link which might help to clarify AER
    http://www.fool.co.uk/news/comment/2004/c040701e.htm


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    #4
    naitkris
    Closed Accounts Posts: 660 ✭✭✭naitkris


    RaboDirect wrote:
    Take a look at this link which might help to clarify AER
    http://www.fool.co.uk/news/comment/2004/c040701e.htm

    thanks, but that does not explain the difference between AER and CAR - if there is any.


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    #5
    RaboDirect
    Closed Accounts Posts: 40 ✭RaboDirect


    They are the same. Banks should use CAR or AER. in savings adverts. You need to pay attention to the AER in adverts that claim large interest rates for a bonus period. For example, AIB are offering 11% on current account balances up to €1,500. But of course you are not going to get 11% for the whole year on your money. The annualised rate over the entire year would actually be 5.81% because the 11% rate only applies until the middle of June. Then the rate reverts back to 4%.

    The Financial Regulator's gudie to savings and investments might be of interest:
    http://www.ifsra.ie/frame_main.asp?pg=/consumer/cr_intr.asp&nv=/consumer/cr_nav.asp


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