Timeline for Does "monthly interest of 1.5% AER" mean that I will get a 1.5% interest every month?
Current License: CC BY-SA 4.0
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| Jul 13, 2018 at 17:25 | comment | added | Grade 'Eh' Bacon | @MooseBoys Yes thanks - for reference for those wondering about the difference, this is because the interest earned in month 1 also earns interest itself (it 'compounds'), and so on for each future month, so if the actual calculation was 1.5%/12 each month, then total interest earned over the period would be more like 1.6%. | |
| Jul 13, 2018 at 1:14 | comment | added | MooseBoys | @DavidSchwartz AER and APR are essentially the same but with the crediting direction swapped. The expression in my previous comment yields 0.12415%, or 1/12 of 1.4898%, which is essentially what Grade's answer states. I was just adding an explanation for where the "1.49%" came from. | |
| Jul 12, 2018 at 21:27 | comment | added | MooseBoys |
The exact value is 1.015^(1/12) - 1.
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| Jul 12, 2018 at 14:24 | history | answered | Grade 'Eh' Bacon | CC BY-SA 4.0 |