Overdraft Calculator

The Overdraft Calculator enables you to estimate the fees associated with overdrawing your bank account. Use this tool to assess your spending habits and make informed decisions about your finances, ensuring you stay within your account limits and avoid unnecessary charges.

Daily Interest Charged:

$0.25

Total Interest Charged:

$7.50

Total Amount Owed:

$507.50

Overdraft Calculator

Overdraft Calculator

An overdraft occurs when you withdraw more money than is available in your bank account, leading to a negative balance. Banks allow overdrafts up to a limit, but they charge daily interest on the borrowed amount. This calculator helps determine the total interest and amount owed based on the overdraft balance, interest rate, and duration.

How to Use the Calculator

Enter the following details:

Formula

Calculate Daily Interest Charged

Daily Interest Charged = Overdraft Balance * (Daily Overdraft Interest Rate / 100)

Calculate Total Interest Charged Over the Period

Total Interest Charged = Daily Interest Charged * Number of Days Overdrafted

Calculate Total Amount Owed

Total Amount Owed = Overdraft Balance + Total Interest Charged

Example Calculation

Let’s say John has an overdraft balance of $500, with a daily overdraft interest rate of 0.05%, and he has been overdrafted for 20 days.

Step 1: Calculate Daily Interest Charged

Daily Interest = 500 * (0.05 / 100) Daily Interest = 500 * 0.0005 Daily Interest = $0.25 per day

Step 2: Calculate Total Interest Charged

Total Interest = 0.25 * 20 Total Interest = $5.00

Step 3: Calculate Total Amount Owed

Total Amount Owed = 500 + 5 Total Amount Owed = $505

Frequently Asked Questions (FAQs)

What is an overdraft?

An overdraft happens when you withdraw more money than your available balance, causing a negative account balance.

How do banks charge interest on overdrafts?

Banks charge daily interest on the overdrafted amount. The longer you stay in overdraft, the more interest you will owe.

How can I reduce overdraft charges?

Can I avoid overdraft fees?

Yes! You can avoid overdraft fees by enabling overdraft protection, setting up low-balance alerts, or keeping a financial cushion in your account.