Accrued Interest Calculator UK Savings

UK Savings Interest Formula:

\[ Accrued = Balance \times \left(\frac{AER}{100}\right) \times \left(\frac{Days}{365}\right) \]

Accrued Interest:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Accrued Interest in UK Savings?

Accrued interest is the amount of interest earned on a savings account over a specific period before it's paid out. In the UK, this is typically calculated using the AER (Annual Equivalent Rate) which shows what the interest rate would be if interest was paid and compounded once each year.

2. How Does the Calculator Work?

The calculator uses the UK savings interest formula:

\[ Accrued = Balance \times \left(\frac{AER}{100}\right) \times \left(\frac{Days}{365}\right) \]

Where:

\( Balance \) — Current account balance in pounds (£)
\( AER \) — Annual Equivalent Rate (percentage)
\( Days \) — Number of days interest is being calculated for

Explanation: The formula calculates the proportional interest earned for a specific number of days based on the annual rate.

3. Importance of AER

Details: AER allows easy comparison between savings accounts by showing the annual interest rate that would be paid if interest was compounded annually. It's the most important figure when comparing savings accounts in the UK.

4. Using the Calculator

Tips: Enter your current balance in pounds, the account's AER percentage, and the number of days you want to calculate interest for. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is AER the same as APR?
A: No, AER is for savings (showing what you earn), while APR is for borrowing (showing what you pay). Both are annual rates but used for different products.

Q2: How often is interest typically paid?
A: This varies by account - monthly, quarterly, annually or at maturity for fixed-term accounts.

Q3: Does this calculator account for tax?
A: No, this shows gross interest. Remember you may need to pay tax on savings interest depending on your personal savings allowance.

Q4: What about accounts with tiered interest rates?
A: This calculator assumes a single AER. For tiered accounts, you may need to calculate each tier separately.

Q5: How accurate is this calculation?
A: It provides a good estimate for most standard savings accounts, but actual payments may vary slightly depending on the bank's specific calculation methods.