The Rate Tart

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Earn 12% gross per anum/AER. Really?

Well, like most things these days, the answer is yes, but in some senses, no. You can earn 12% gross p.a./AER. However, at the end of the year, the real return is closer to 6.5%. They key word here is "gross".

Let's look at the example from Alliance & Leicester's website.

"If you invest the maximum of £250 per month, a total of £3,000 will be paid into your account during the 12 month term. At 12.00% interest, you would earn £195 gross."

A £195 return on £3000 is 6.5%. As mentioned, the key word here is gross. The website states - "Gross is the interest paid before tax". So 12% is your pre-tax interest rate.

As with most accounts like this, they have a rigid set of rules that must be adhered to in order to gain the full benefits.

• Withdrawals - No withdrawals are permitted. If you need access to your money, the account must be closed.
• Minimum balance - £10.
• Maximum balance (over fixed 12 month period) - £3,000
• Minimum Monthly Deposit - £10.
• Maximum Monthly Deposit - £250
• Interest frequency - Annual. At the end of 12 months on the anniversary of the first payment due date.
• Applicants age requirements - 21 and over.
• Application options - Apply online or by phone as part of a new Premier Current Account
• Statements - Internet access is required to view statements.

A few other details to know:

The Premier Regular Saver account (with an interest rate of 12.00% gross p.a./ AER) is only available to those opening a new Premier Current Account.

To be eligible for Premier Regular Saver at a rate of 12.00% gross p.a./AER: applicants must not currently hold any A&L current account and applicants must not have held any A&L current account in the three months preceding a new Premier Current Account application.

Further information, including full Terms & Conditions, can be found here.