APR and nominal rate (TAE and TIN)
When a bank advertises a loan or a deposit, you will almost always see two percentages: the TIN and the TAE. They look alike, but they do not say the same thing.
What the TIN is
The TIN (nominal interest rate) is the "pure" yearly interest rate. It does not take into account fees or how often interest is paid.
What the TAE is
The TAE (annual equivalent rate, similar to the APR in other countries) is a percentage that sums up the real cost of a loan or the real return on savings. It includes the interest, how often interest is paid and, for loans, mandatory fees and costs. Banks must show it in their advertising so you can compare.
An example with savings
A deposit with a 5% TIN that pays interest every month. Because the interest paid each month also earns interest (compound interest), at the end of the year you earn slightly more than 5%: the TAE is about 5.12%.
An example with a loan
Two loans with the same TIN. One charges no fees and the other charges an opening fee. The second will have a higher TAE, because the real cost is higher even though the TIN is the same.
Which one to look at
- To compare different products: look at the TAE, which includes everything.
- To know what interest rate is applied: the TIN tells you, but it ignores extra costs.
What the TAE does not include
It does not include optional costs, such as non-mandatory insurance, or conditions that must be met to keep the rate (such as having your salary paid into the account). Always read the small print.
To see what a loan would cost you, use the mortgage and loan calculator.
The TIN is the pure interest rate; the TAE also includes fees and payment frequency. To compare, look at the TAE.
Informational and educational content. Not financial advice.