When it comes to savings, the gross rate refers to the interest rate on a savings account or investment before any deductions, such as taxes or fees, are taken into account.
It represents the rate at which your savings grow without considering any potential deductions or expenses.
Gross Rate Example:
For example, let's say you have a savings account in the UK with a gross interest rate of 3%. This means that your savings will accumulate interest at a rate of 3% per year before any deductions.
If you have £1,000 in your account, at the end of the year, you would earn £30 in interest (3% of £1,000) before any taxes or charges are applied. The gross rate provides a clear indication of the interest your savings can generate, allowing you to compare different savings options and make informed decisions.
It is important to note that the actual amount you earn will be lower than the gross rate due to any applicable deductions, such as tax.