Translate a Savings Account Rate into What Your Money Actually Earns

Two savings accounts with slightly different AERs and you cannot work out whether the difference matters. This converts both rates into what you will actually earn in the year, before and after tax, and tells you which account pays more and by how much. Rates, not marketing. Numbers, not percentages.

Translate the savings account interest rates below into plain numbers, so I can compare them accurately.

For each account:
1. State the AER (Annual Equivalent Rate) and what it means in plain terms.
2. Calculate the interest earned on [amount to deposit] over one year at each rate, before and after basic-rate tax.
3. If any rate is variable, note what it was six months ago if that information is provided and what the change means for earnings.
4. State which account pays the most after tax, and by how much.

Accountsand rates:
[list each account name and its current AER or gross rate]
Amount to deposit: [amount]
Taxpayer status: [basic rate / higher rate / non-taxpayer]

Note: this is a calculation exercise, not financial advice.