New to the forums - Questions about Overdraft

petite_sarah17

Thx for the info folks.

But are my calculations corret.

E.g. If i went £1000 over my overdraft limit, and i had to pay back interest with 19.9% EAR. So £1199 in a years time? (excluding the charges as Lokolo pointed out)

Is that how OD interest is calculated?

Lokolo

Yes that is correct.

The interest is calculated daily. So infact the interest will be 55p a day. Then usually every month the interest is added to your account (so around £20)

petite_sarah17

Lokolo wrote: »

Yes that is correct.

The interest is calculated daily. So infact the interest will be 55p a day. Then usually every month the interest is added to your account (so around £20)

So I pay the interest monthly? If i pay money into my account, they would automatically deduct £20 a month as interest payment?

Thanks again Lokolo

Lokolo

petite_sarah17 wrote: »

So I pay the interest monthly? If i pay money into my account, they would automatically deduct £20 a month as interest payment?

Thanks again Lokolo

Yes. Its the same with Credit Cards.

Obviously the £20 would only be if you were -£1000. (and the rate 19.9%). So you would go -£1020. then -£1040.

Also, as above, the rate is based on daily. So if you went from £100 to -£1000 for 1 day, you wouldn't be charged the whole £20. Its only the £20 if you spend the whole month at -£1000.

petite_sarah17

I think i'm starting to understand the business of overdraft now.

Lokolo, how did u work out the 55p daily interest?

Lokolo

You already worked out the yearly interest. Just divide it by 365.

So £199 / 365

£199 = £1000 * 0.0199

petite_sarah17

Lokolo wrote: »

You already worked out the yearly interest. Just divide it by 365.

So £199 / 365

£199 = £1000 * 0.0199

I see. I was working in out a diff method.

199 / 12 = 16.63 as monthly interest lol.

Stubert

When you graduate with HSBC, currently you switch to their Graduate Account and its interest free up to £1500 in the first year and graduation and £1000 interest free in second year.

My max overdraft currently is £2000, but only £1500 is interest free.