Need help calculating Overdraft interest

mg2008

Hi,

I'm a bit stuck with calculating overdraft interest... Hopefully someone can help.

The terms of the overdraft state interest is charged at 3.5% p.a. over Base rate - So therefore, currently 4% p.a. It's a business overdraft and no EAR is given.

So, if I was to use the full overdraft facility of £10,000 for a full month (not changing amount borrowed), how do I work out what I will pay and how much is it?

Many thanks for any advice!

zxspeccy

I may be over simplifying this but:

£10K x 4% / 12 = £33.33

This is just a rough figure as overdraft interest is worked out on a daily basis, so the figure will change slightly depending how many days are in the month.

Does seem a very cheap rate you've got there.

mg2008

Thanks for your advice... I was coming up with £10k x 4% = £400 every month and thinking that's a lot!

DevCoder

Interest = Amount * Rate% * (Days/Currency Basis)

Currency Basis for GBP = 365, for virtually all other currencies = 360

So for example assuming june, hence days = 30

Interest = 10,000 * 4% * (30/365)

= £32.88