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Money basics (UK)

The vocabulary: APR, APY, AER, interest, inflation and the rest.

Financial products are advertised in standardised percentages so they can be compared. APR is the annual cost of credit including compulsory charges; AER is the annual return on savings including compounding. The UK adds a caveat worth knowing: an advertised APR is usually "representative", meaning only 51% of accepted applicants need be offered it.

What this section covers

  • What each advertised percentage actually includes
  • Where a headline rate misleads
  • How compounding changes a return
  • Working out the cost of a specific deal

Written for the United Kingdom. Terminology, protection limits and regulators differ between markets, so a guide from another country will not transfer cleanly.

UK money basics guides

    Answer

    APR vs AER: What's the Difference?

    APR is what borrowing costs. AER is what saving earns. Both are annual percentages, both are regulated, and they measure opposite things.

    Updated 25 August 2026 · 2 min read
    Answer

    What Is APR? Representative APR Explained

    APR is the yearly cost of borrowing including compulsory charges. Most UK advertised rates are 'representative' — you may be offered a higher one.

    Updated 25 August 2026 · 3 min read

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