Overdraft charges?

mark87

Hi - I'm new here but expect to a regular with the way I manage money lol!

I recently increased my overdraft with my bank (lloyds tsb) to £250. Not much really but to me, a student working part time it's more than enough.

I don't quite understand how interest on my overdraft is calculated.

They calculate interest DAILY but say their interest is 1.37% per month. I'm sure this doesn't mean they charge 1.37% of how much I am into my overdraft each day and add it all up at the end of the month?

So if - for complete talking sake - I had spent £200 of my overdraft on the 1st of April. Does that mean they are charging me £2.74 every day (based on the 1.37%?) and I will end up paying over £80 in interest at the end of the month?

Or is the interest they charge daily smaller than the 1.37%? Need some help here!

I tried to ask the bank manager the day I got the increase in overdraft and I put such a question to him. He said the interested would be 'a matter of pence' and I was out the door within minutes lol.

grumbler

Daily rate is about 1.37%/30=0.0457%
£200 overdraft will cost you about 9p per day.:D
Interest is calculated and deducted once a month.

maforduk

The overdraft charges is based monthly. That's 1.37% a month.
E.g. Say your overdrawn by £200, then you: £200 * 1.37% = £2.74 interest for that month.
That's for arguments sake £0.09p over a 30 day month.