Annual Equivalent Rate (AER)

Annual Equivalent Rate (AER) is the figure Irish savings providers must quote when advertising deposit accounts. It expresses the gross annual interest, assuming interest is left in the account and compounds for a full year, on a like-for-like basis between products.

AER matters because compounding frequency varies. An account paying 4% nominal interest paid monthly is worth slightly more over a year than one paying 4% paid annually — the AER captures that difference and lets you compare them directly. Headline “monthly bonus” or “stepped” accounts often quote a flattering AER for the first year; check whether the rate drops after an introductory period.

AER is gross: it does not include DIRT. A 4% AER account loses 33% of the interest to DIRT, giving an after-tax return closer to 2.68%. When you’re sizing the impact of savings on a goal — say, a deposit for a house — model the after-DIRT figure, not the AER.

Use the compound-interest calculator to see how AER and compounding frequency combine over time, or the savings goal calculator to size monthly contributions toward a target.