Overdraft interest confusion

FaunaFairie

So I'm really unsure of how interest actually works on overdrafts...

I have a current account with Natwest and an arranged £2000 overdraft limit. It says the nominal month rate is 1.52%, Nominal annual rate is 18.28% and EAR is 19.89%. No fees.

Example 1: I go into my overdraft by £250 for one week only. Would I pay a one off 1.52% interest charge on that £250? So effectively a charge of £3.80 for that month?

Example 2: Week 1, I go into my overdraft by £50, a week later another £200, so £250 in total. Would it be a one off 1.52% interest charge for that month on £250? So effectively £3.80. Then in the next month my overdraft goes up to £300, so another 1.52% on that, the charge for that month then being £4.56. Then I manage to come out of overdraft so total interest would have been £8.36?

Am I correct in what I think?
Also when in the month would the charge come out?

Thanks

YorkshireBoy

Debit interest accrues daily at the rate of:

Closing balance x 18.28% / 365

Once a month, the sum of all these daily charges in that month's billing period (not necessarily 31 days...could be 28, 29, 30, or more) is debited to your account.

As to when this charge is debited, see your T&Cs.

FaunaFairie

Ok I think I understand, so I would effectively be charged 0.05% a day?

Example 1:So if I was in my overdraft £250 for 7 days it would work out as 88p charge for that month.

Example 2: If I was £50 in for 7 days, 0.05% on that would be 18p. Then for the rest of the month, lets just say 24 days it went up to £250, it would be £3.00. So a total charge of £3.18 for that month.

pmduk

In future, just remember, the time to check these calculation is before you incur the interest.