Did you find this article useful?
You may see this abbreviated to p.a. when looking at areas where per annum is used.
Per annum is often used in finance to indicate things like:
When it comes to savings, per annum is often referred to as the annual equivalency rate (AER). AER shows how much interest you’ll earn if you keep your money in a savings account for a full year. Shown as a percentage, it can help you compare savings products to find the right one for your circumstances.
AER also factors in compound interest, which is any interest you earn on top of interest you’ve already been paid. Although, it doesn’t account for any fees or charges.
You may also see ‘gross’ when looking at interest rates. This is rate of interest paid before any appliable tax has been deducted.
Explore: Savings terms
With savings, interest is typically calculated each day – and then paid either monthly or per annum (annually), depending on your account.
To put it simply, imagine you have £2,000 in your savings account, which pays interest at 3.00% AER. After one year, you’d make £60 in interest. If you wanted to know what this would be monthly, you would just divide that £60 by 12, which would be £5 a month.
Explore: Why do interest rates change?
Did you find this article useful?
