Ben Perkins – Director of Partnerships & Services, Plain Numbers.
Getting your head around the numbers can really help you make the most of your savings. Plain Numbers works with a number of savings providers to help them communicate numbers as clearly as possible.
We’ve put together this article to help you understand the numbers that come with savings accounts.
Earning interest
Interest is money that you earn on savings. The amount you get from an account will be shown as a percentage. The higher the percentage, the more you earn. For example, if the account pays 3% interest, you earn £3 for every £100 you have in your account.
You’ll see a number called AER (or Annual Equivalent Rate). It’s there to help you compare rates across different accounts. A higher AER means you get more interest overall.
This number can be different to the interest rate because it takes into account how often you get paid the interest.
For example, if an account pays 4% interest but as 2% every six months rather than one payment at the end of year, you will earn more. That’s because when the first interest payment is added to the account, your total savings are higher when the second interest payment is worked out. In other words, the interest you have already been paid will itself earn interest as part of your savings pot. The AER will be higher than 4% to show this.
As well as the number, you should also look out for whether the interest rate is fixed or variable. If it’s fixed that means it won’t change, if it’s variable then it could go up or down.
Knowing the limits
Savings accounts sometimes come with limits which you’ll want to know before you sign up. Often there will be a withdrawal limit, which means the amount you’re allowed to take out of the account without being charged. Some accounts give ‘instant access’ so you can get to your money at any time, but some don’t. If it’s not instant access, check what the penalties or charges are if you need to get to your money earlier than allowed.
There might also be a deposit limit. That’s the highest amount that you can put into your account. Some offers also have a minimum deposit, which means the smallest amount you can put in to still get the offer.
Your ISA allowance
When you’re looking for a savings account, you’ll come across Individual Savings Accounts (ISAs). These are a specific type of account which can be worthwhile because you don’t have to pay tax on the interest you earn.
Everyone has an ISA allowance each year, that’s the most you can put in an ISA in a tax year without having to pay tax. At the moment, that amount is £20,000 per tax year (6th April 2026 to 5th April 2027). You start again with a new allowance in a new tax year, even if you didn’t use your allowance in the previous year. The ISA allowances are changing from 6 April 2027.
You can find out more about Plain Numbers and the work they do to simplify financial communications on their website.
