What is AER and how is it different from Gross Yield?
Gross Yield is the rate applied to your account balance to generate interest, while AER (Annual Equivalent Rate) represents the effective interest rate you would receive by the end of the year, considering daily compounding.
For example, if you maintain a constant balance of £1,000 in your account for a year with a Gross Yield of 2.96% per year (compounded daily), then your balance increase over the year would include the interest earned on your initial deposit as well as the interest earned on any previous interest added to your account balance.
With daily compounding, at the end of the year, your balance would be £1,030, resulting in an AER of 3%.