How do I work out APR of a daily fee Halifax overdraft?

Gerrymouse · 12 March 2017 at 11:22AM

I am with Halifax and they charge daily fees for going overdrawn, so £1 per day for up to £1000 overdraft, £2.00 per day up to the next tier and then £3 for anything over £3000 or something.

I typically pay around £78 per month for my overdraft of £4,500.

I called Halifax and asked them for the APR and they couldn't tell me, I want to sort my debt into APR order so I can figure which to pay off first.

I appreciate I might not get exact figure but would I just assume 21% given £4500 x 21% is £78 monthly

I appreciate there is the issue of compound interest ?

Any help much appreciated

masonic · 12 March 2017 at 11:34AM

So your account is permanently £4,500 overdrawn? If so, then your figures are roughly correct. Compound interest would not apply if you are paying off the overdraft fees rather than letting them increase your debt. Are you in financial difficulties?

Overdrafts are designed to bridge the gap between paying bills and getting paid, so you'd normally only be in overdraft for part of each month.

YorkshireBoy · 12 March 2017 at 12:29PM

Best summed up in one word...massive (if it could be calculated)!

They can't quote an EAR (not APR) because it's not based on exact balance, but balance tiers.

In your situation there's no point in paying off the overdraft unless you can drop a tier by doing so. So concentrate on other debts (incurring true APR interest) such as credit and store cards.

There may be other options available to you to reduce this burden, depending on your financial circumstances. If you state exactly what they are (total debt, where it is, income, credit history, etc) then I'm sure suggestions will follow.

Gerrymouse · 12 March 2017 at 1:43PM

YorkshireBoy wrote: »

Best summed up in one word...massive (if it could be calculated)!

They can't quote an EAR (not APR) because it's not based on exact balance, but balance tiers.

In your situation there's no point in paying off the overdraft unless you can drop a tier by doing so. So concentrate on other debts (incurring true APR interest) such as credit and store cards.

There may be other options available to you to reduce this burden, depending on your financial circumstances. If you state exactly what they are (total debt, where it is, income, credit history, etc) then I'm sure suggestions will follow.

Yes makes sense and my plan was clear an entire tier at a time , thanks

LabRatty · 12 March 2017 at 3:01PM

Hi,
Could you get a money transfer card and shift the debt onto a 0% card? Obviously depends on the state of the rest of your finances, but would mean you were repaying the debt without interest continually being added.

Also, ODs are repayable on demand, which means this bit of your debt is more precarious than it might be if reorganised.

All the best,
LR

pinkdalek · 12 March 2017 at 9:28PM

Just one question.......Why?

PeacefulWaters · 13 March 2017 at 4:18AM

pinkdalek wrote: »

Just one question.......Why?

Answered in the original post, and makes sense.

I want to sort my debt into APR order so I can figure which to pay off first.

mt99 · 13 March 2017 at 11:38AM

One way to work out the effective interest rate of a series of regular payments (for example monthly) is to use the Excel @IRR function - which you can Google - that will give the rate of return Halifax is getting from your stream of (varying) payments

How do I work out APR of a daily fee Halifax overdraft?

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