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Annual Equivalent Rate (AER) is one of the mostly used indicators for lending and borrowing money. However, unlike what the name suggests, it does not represent an equivalent rate if it was compounded annually.
Let’s look at a simple example:
You borrow £100 with a rate of 10% for a year compounded annually. As you would expect this the money you owe by the end of the year will be £110.
In another case where you borrow £100 with a monthly compounded rate of 10% AER, things are different. At the end of the year you don’t owe the same amount, but instead you owe £110.47. Well, it’s not equivalent, is it?
The reason being that the monthly interest rate is assumed to be equivalent of the AER rate divided by 12 months, which is clearly false mathematics. The difference may not seem a lot in the case of £100 as above, but in larger sums, e.g. in a case of a mortgage which lasts for many years, this may be accrued to a sizeable amount.
I question the sincerity in the naming of such tools. Naming of technical terms should not be a mechanism to mislead people. And I am surprised how governments have allowed AER’s usage.
I hope other people find this as annoying as I do. Give me your thoughts.
Why do BT not HAVE TO tell customers BEFORE they sign up to Fibre to the premises they can not change supplier
We had fibre installed in our village last year and were suitably grateful. I am a BT customer and asked for it to be installed and they did so in due course. Only now do I find they installed FTTP (fibre to the premises or fibre to the home ftth) and when I try to get a quote for a fibre service from other suppliers to check my service is reasonably priced (which it is not) they say I am not connected to fibre. On further investigation this is because BT through their subsidiary Openreach will not give any supplier but themselves access to my line hence I am a captive of a monopoly.Surely I should have been told all of the implications BEFORE being asked to agree to a supply and not left to find out for myself. I have complained to Ofcom but they do not want to know !! Is anybody else interested in taking on BT to get this monopoly broken.
How about the new so called free smart meters that will cost every home £400 plus another over a billion for recalls. Common sense means if you heat anything it costs big money, the rest is peanuts in comparison.
It’s just a simple idea, but doesn’t seem to exist on Which? As usual when I need a new product or service I turn to Which? In this case I need my wedding dress dry cleaning… how should I choose a provider, what to look out for and what to pay. There doesn’t appear to be anything (or at least not when I search the Which? website). Isn’t it about time Which? helped with dry cleaners?
Is it possible to clean efficiently and be kind to the environment?
I am passionate about marine conservation and try to buy products that cause the minimum amount of harm to the aquatic environment. Sadly, Ecover products routinely come at or near the bottom of the rankings and there don’t seem to be any others reviewed. It would be great to combine efficiency with environmental awareness.
Hi how much did you have to spend on school uniform last September? my cost was quite expensive because my son started secondary school so i bought him a brand new uniform. how doe my cost compare to your cost ? my sons uniform cost
school jumper £11×2
school polo shirt £9×3
school trousers £7×2
school shoes / plain black lace up plimsolls £3
We’ve used standard dinner candles from Morrisons for years. The last batch bought in December 2016, in readiness for Christmas have proved a disaster.
They have melted, dripped and leaked all over the place causing a real mess on our mantelpiece. The inherent fire hazards of this are unthinkable. I’ve emailed Morrisons who’s supplier Spaas, eventually returned a pathetic set of excuses. I remonstrated on the dangers of poor quality materials etc, but to no avail.
Has anyone else had such a problem?
Now that the Yorkshire has pulled out of the market is the Nationwide the only mutual left to offer a current account? I’m with the Coventry which closed its current account to new members recently, and will doubtless close remaining accounts sometime soon. What is the best option for those who don’t want their money used for the benefit of corporate shareholders?
Why does an eco-labelled wood stove emit more pollution than 25 ten-year-old diesel trucks?
The New Scientist showed that “Log-burning stoves are harming our health and speeding up global warming.”
The UN Environment Program recommends phasing out log-burning stoves to improve health & reduce climate change.
The Danish Ecological Council showed that even an eco-labelled wood stove pollutes as much as 25 ten-year-old diesel trucks.
PM2.5 air pollution kills 38,000 UK residents every year. Wood as a domestic fuel is the largest contributor to UK PM2.5 emissions (47,000 tonnes per year), nearly 3 times more than all road transport (13,900 tonnes/yr). The average new wood stove approved for UK Smokeless zones emits more PM2.5 per year than 1,000 petrol cars or 200 Euro-5 diesels.
Reviews of wood stoves should be updated to include information on health and air pollution, and consider the UN Environment Program recommendation that developed countries phase out this major source of PM2.5 pollution.
More info: woodsmoke.3sc.net/files/UK_PM25_pollution_extracts_of_supporting_documents.pdf
woodsmoke.3sc.net/greenhouse
woodsmoke.3sc.net/health
Thank you for your comment. In the coming years, the European Union will be changing the laws around stove efficiency to reduce harmful emissions even further.
We are actually in the process of updating our guide to look at this, and will be looking into the matter in more depth in due course.
Hope that helps.
1
mary constantine says:
12 February 2017
autism
Autism is at epidemic levels now and so many parents are frazzled and need answers and need to ask question on the topic
we need more autism topics, how to help child with autism cope with school , travel, homework or just sitting still .
I use an autisticvest to help my son it really works but any other ideas are welcome
Hosts can and do cancel (with mild penalties) some considerable time after a firm booking has been made because they want to increase the price for the booking . If you refuse to pay more, airbnb refund your money (but no interest) and offer a 10% discount on your next booking. All very well but when it happens twice in a row 5 months after the second booking was made who would then risk booking another property with airbnb again? Certainly not me!
The government is always looking for Productivity Improvements -here is one way of helping
Recently on this site there was a complaint about Experian because the person complained that although they were in residence for 55 years, Experian (and it applys to ALL credit agencies) were unable to verify their existance and why does the government not do something about it. I have tried through my MP to get something done but nobody seems to be bothered that thousands of man hours are being wasted by us all having to supply proof of who we are from two lists of forms (passports,driving licence etc) just because the systems being used by the credit agencies are stupid. All the govenment needs to do is prescribe what checks are necessary and give them (The credit agencies) access to passport and drivers info and the whole process could be speeded up. Because my wife keeps opening new savings accounts, to try and get the best interest rate month by month, we have to provide this proof almost daily even though she is 77 lived here all her life and never had any bad debts and has passport ,driving licence etc. What a complete waste of time for all concerned.
Post Office requires payment for cancelled service…
Should the post office hold on to your money after you cancelled a service? E.g., they take a quaterly payment up front (E.g,. payment in February to cover May) If you cancell part of your service before they collect payment (even two weeks before) you still have to pay the full bill amount for the quater as if you had not cancelled. They say the refund will be reflected in your next quarterly bill which is effectively months away. So you are effectively still paying for a service you won’t be using. Is this right? I would like the benefit of my money straight away not months down the line. I question the ethics of having to firstly pay for something I am not using and then having to wait months to get my money back. On top of this the Post Office say if I cancell my direct debit to allow them to make the adjustments they will restrict my calls and still require the same payment that they will later refund. Is it just me or does this sound like nonsense to anyone else?
It will be so easy for this government to sort out the energy companies privatise them let’s go back to all the profits going back in and then we will see a massive drop in prices at the moment if the price of gas or electricity goes down we never see it in our bills there is no reason for a increase now as they keep telling us that they ant drop prices as they buy there energy months if not year behind now they say prices have to rise due to the pound going down so if they buy the energy months our years before then if the pound drops it should not make a difference yet they can’t have it both ways But they do Dick Turpin comes to mind
Why are some prices rising now, supposedly due to Brexit, when we haven’t even left Europe yet? There’s even a slim chance we may not leave at all, so what happens then – big refunds? Some of these companies are apparently making the most of the situation before anything has even happened. The one thing that will never change is business making the most of every available opportunity to rip off as many as possible.
Is the lack of competition in Package Holidays now at a point where we are receiving appalling customer service?
The Monopolies Commission doesn’t seem to have an interest in the fact that from a package holiday perspective, we seem to have only a couple of giants now owning most brands in the UK. As a result the customer service seems to be declining…there’s not even a regulator to help! So how can we start to have more of a say in trying to gain the respect from these companies, that we deserve as consumers who’ve parted with our hard earned cash?
There are some good points in this article, but I suspect it’s author Ben Slater was not made aware of some very useful advice when he wrote it. For example, he says “wait for the ice to melt”, but many manufacturers supply a scraper. The most recent time was yesterday, when my wife and I completed the task on a rather large domestic chest freezer. It was full, but including emptying, sorting and refilling, it took nicely under 90 minutes. I have a trick but it doesn’t involve electricity, because Ben’s comment about electricity and water not mixing is a good one. I’m wondering how many people have an effective and fast technique.
We recommend waiting for the ice to melt, because we don’t want to offer advice that will invalidate anyone’s warranty. That said, you’re right to point out that if the manufacturer supplies tools for the job, then so much the better.
If you’re in any doubt, though, it’s always a good idea to check the terms and conditions of your warranty with the manufacturer.
pension changes and the lack of clarity in the information that has been put out and given in response to questions.
As someone who missed the old pension by a few days I have a complete lack of clarity on several points. Also there is nothing joined up.
I asked for a forecast and received one that assumed that as I was on retiring (because of company rules) enrolled in a contracted out scheme I had spent my the full working life contracted out. Also the time in work does not add up. Then again In he new scheme the pension is strictly personnel, however is the pension I was paying into also applied to a partner raising children etc. Does that still apply to those who paid into the old scheme or has my wife lost what we paid for?
Again I cannot get answers.
Its just not acceptable to just go silent on us
I
Why do Amazon not insist that their marketplace sellers follow the consumer laws on faulty goods after their arbitrary 30-days return policy has expired?
I bought a Rotho bin from ehappypets.co.uk, which broke after three months. The company refused to do any thing and Amazon backed them up.
Also, Amazon removed comments I made on Seller Feedback without informing me or telling me why. Amazon say they want to build the most “customer-centric” company in the world. Really?
Wondering if anyone has any experience of buying a washer dryer with a right hand door opening, or if there are right hand door opening washer dryers available on the market?
I was rather excited to get the results of my genealogy test from Ancestry, UK. It
showed I was 71% British, 17% Irish and 6% of me came from the Iberian Peninsula. In addition there were very small bits of other nationalities in my genes. I then got to thinking, what is British? English, Scottish and Welsh were not identified as separate groups. Internet research revealed the complex makeup of we British but none of this shows in the Ancestry results. It’s very dissapointing! My advice is don’t waste your money on what is a very shallow report.
With all the publicity in the national press about Russian hacking how can we be sure that Kasperski hasn’t deliberately developed an excellent anti virus system which it sells at a sensible price for the particular target market but which actually contains a trojan that can be activated whenever Kasperki feels it would help Russia?
Banks using your account direct debits to cold call and sell their own products
I recently received a call from HSBC asking if I would like to switch from John Lewis home insurance to their own product. When asked how they knew I was currently with John Lewis they said they could see payments to them from my bank account – is this right can they cherry pick accounts to sell their products? I found this to be very disturbing and totally unethical.
British Airways downgrades for 2 for 1 voucher redemptions
It appears BA have a policy of targeting passengers travelling on 2 for 1 vouchers for downgrades or no-flight in the event of a plane being overbooked. These vouchers are often hard earned as part of a loyalty scheme and are booked months ahead, often as part of a long awaited special holiday. It appears 2 for 1 ticket holders are targeted for downgrades for the purely short sighted commercial reason of getting the seats filled by people paying the full price. Compensation is also miserly. Rather than getting benefits for their loyalty, these passengers are being treated with contempt by our national carrier. Regardless of what the legal position may or may not be, the practice is morally repugnant. I wonder if anyone travelling on 2 for 1 vouchers or other redemptions has been affected by this.
I assigned my loyalty card points from the start in equal amounts to two charities. Then if I remember to get them recorded, they’ll profit something I support: but I don’t feel unduly annoyed if I forget. My principal card is a Co-op one, but probably some of the other firms do likewise.
I’m sure the community would love to hear your views on this.
Thanks
0
Carol says:
27 February 2017
A Which? about Pets
Just like Computing Which? etc I think there is a place for it. Information about pet foods is conflicting and often dogmatic. Also my impression is that goods sold for pets do not put a high priority on safety or comfort for the animal – cages are typically far too small, for example. Given the range of pet animals, the widespread ownership, and the need for advice, I think the scope for articles is vast.
Share your idea
AER is it as “equivalent” as the name suggests?
Let’s look at a simple example:
You borrow £100 with a rate of 10% for a year compounded annually. As you would expect this the money you owe by the end of the year will be £110.
In another case where you borrow £100 with a monthly compounded rate of 10% AER, things are different. At the end of the year you don’t owe the same amount, but instead you owe £110.47. Well, it’s not equivalent, is it?
The reason being that the monthly interest rate is assumed to be equivalent of the AER rate divided by 12 months, which is clearly false mathematics. The difference may not seem a lot in the case of £100 as above, but in larger sums, e.g. in a case of a mortgage which lasts for many years, this may be accrued to a sizeable amount.
I question the sincerity in the naming of such tools. Naming of technical terms should not be a mechanism to mislead people. And I am surprised how governments have allowed AER’s usage.
I hope other people find this as annoying as I do. Give me your thoughts.
Why do BT not HAVE TO tell customers BEFORE they sign up to Fibre to the premises they can not change supplier
How about the new so called free smart meters that will cost every home £400 plus another over a billion for recalls. Common sense means if you heat anything it costs big money, the rest is peanuts in comparison.
No Help From Which? on Dry Cleaners
Is it possible to clean efficiently and be kind to the environment?
school uniform cost
school jumper £11×2
school polo shirt £9×3
school trousers £7×2
school shoes / plain black lace up plimsolls £3
The danger of candles in the home
They have melted, dripped and leaked all over the place causing a real mess on our mantelpiece. The inherent fire hazards of this are unthinkable. I’ve emailed Morrisons who’s supplier Spaas, eventually returned a pathetic set of excuses. I remonstrated on the dangers of poor quality materials etc, but to no avail.
Has anyone else had such a problem?
Mutual current accounts
Why does an eco-labelled wood stove emit more pollution than 25 ten-year-old diesel trucks?
The UN Environment Program recommends phasing out log-burning stoves to improve health & reduce climate change.
The Danish Ecological Council showed that even an eco-labelled wood stove pollutes as much as 25 ten-year-old diesel trucks.
PM2.5 air pollution kills 38,000 UK residents every year. Wood as a domestic fuel is the largest contributor to UK PM2.5 emissions (47,000 tonnes per year), nearly 3 times more than all road transport (13,900 tonnes/yr). The average new wood stove approved for UK Smokeless zones emits more PM2.5 per year than 1,000 petrol cars or 200 Euro-5 diesels.
Reviews of wood stoves should be updated to include information on health and air pollution, and consider the UN Environment Program recommendation that developed countries phase out this major source of PM2.5 pollution.
More info: woodsmoke.3sc.net/files/UK_PM25_pollution_extracts_of_supporting_documents.pdf
woodsmoke.3sc.net/greenhouse
woodsmoke.3sc.net/health
Hi @caresabouthealth
Thank you for your comment. In the coming years, the European Union will be changing the laws around stove efficiency to reduce harmful emissions even further.
We are actually in the process of updating our guide to look at this, and will be looking into the matter in more depth in due course.
Hope that helps.
autism
we need more autism topics, how to help child with autism cope with school , travel, homework or just sitting still .
I use an autisticvest to help my son it really works but any other ideas are welcome
airbnb cancellation policies
claims advisory group
Is it legit?
Thanks
Thanks for getting in touch. If you were thinking of using this company to claim back PPI, we’d advise that you do it yourself instead. Our guide http://www.which.co.uk/consumer-rights/advice/how-to-reclaim-mis-sold-ppi takes you through the whole process. Good luck.
The government is always looking for Productivity Improvements -here is one way of helping
Post Office requires payment for cancelled service…
Privatisation
Brexit Price Increases
Is the lack of competition in Package Holidays now at a point where we are receiving appalling customer service?
How to defrost your freezer
There are some good points in this article, but I suspect it’s author Ben Slater was not made aware of some very useful advice when he wrote it. For example, he says “wait for the ice to melt”, but many manufacturers supply a scraper. The most recent time was yesterday, when my wife and I completed the task on a rather large domestic chest freezer. It was full, but including emptying, sorting and refilling, it took nicely under 90 minutes. I have a trick but it doesn’t involve electricity, because Ben’s comment about electricity and water not mixing is a good one. I’m wondering how many people have an effective and fast technique.
Thanks
Tim
Thanks very much for your comment.
We recommend waiting for the ice to melt, because we don’t want to offer advice that will invalidate anyone’s warranty. That said, you’re right to point out that if the manufacturer supplies tools for the job, then so much the better.
If you’re in any doubt, though, it’s always a good idea to check the terms and conditions of your warranty with the manufacturer.
pension changes and the lack of clarity in the information that has been put out and given in response to questions.
I asked for a forecast and received one that assumed that as I was on retiring (because of company rules) enrolled in a contracted out scheme I had spent my the full working life contracted out. Also the time in work does not add up. Then again In he new scheme the pension is strictly personnel, however is the pension I was paying into also applied to a partner raising children etc. Does that still apply to those who paid into the old scheme or has my wife lost what we paid for?
Again I cannot get answers.
Its just not acceptable to just go silent on us
I
Amazon marketplace sellers
I bought a Rotho bin from ehappypets.co.uk, which broke after three months. The company refused to do any thing and Amazon backed them up.
Also, Amazon removed comments I made on Seller Feedback without informing me or telling me why. Amazon say they want to build the most “customer-centric” company in the world. Really?
Washing machines – door reversal
DNA testing
showed I was 71% British, 17% Irish and 6% of me came from the Iberian Peninsula. In addition there were very small bits of other nationalities in my genes. I then got to thinking, what is British? English, Scottish and Welsh were not identified as separate groups. Internet research revealed the complex makeup of we British but none of this shows in the Ancestry results. It’s very dissapointing! My advice is don’t waste your money on what is a very shallow report.
Your right John thats not an in depth report .
Kasperski anti virus software
Banks using your account direct debits to cold call and sell their own products
British Airways downgrades for 2 for 1 voucher redemptions
Use loyalty cards for charity
Hi Hubert Allen,
Thank you for getting in touch.
We discussed loyalty cards only recently.
You can find the convo here: https://conversation.which.co.uk/shopping/loyalty-cards-points-discounts/
I’m sure the community would love to hear your views on this.
Thanks
A Which? about Pets