How to work out APR on overdraft

lynseydee

I hope someone can help me.


I want to put my overdraft details into whats the cost to help me pay off my debts but they ask what the APR is and as they charge an amount per day I'm not sure if this can be worked out as a percentage.


Anyone have any ideas how to do the calculation?


Thanks.

Tixy

I try to work out the equivalent APR you are paying now as a starting point. So if its £1 a day and you are in the overdraft everyday of the month and the overdraft was say £2000 then I would say the APR was-

£30/£2000 is a monthly interest rate if 1.5% which is an APR of 19.56% (per this converter - http://www.stoozing.com/calculator/apr-rate-converter.php).

And I put that in to the snowball and the minimum payment as a fixed amount of £30 a month.

This isn't a bad estimate overall if the overdraft is a dormant account, however if it is still your main current account then its only a very rough guide because 1) as you pay off the balance the effective APR actually increases and 2) you may not be paying the daily charge everyday and only paying towards the end of the month.

lynseydee

Tixy wrote: »

I try to work out the equivalent APR you are paying now as a starting point. So if its £1 a day and you are in the overdraft everyday of the month and the overdraft was say £2000 then I would say the APR was-

£30/£2000 is a monthly interest rate if 1.5% which is an APR of 19.56% (per this converter - http://www.stoozing.com/calculator/apr-rate-converter.php).

And I put that in to the snowball and the minimum payment as a fixed amount of £30 a month.

This isn't a bad estimate overall if the overdraft is a dormant account, however if it is still your main current account then its only a very rough guide because 1) as you pay off the balance the effective APR actually increases and 2) you may not be paying the daily charge everyday and only paying towards the end of the month.

That's a great starting point and is a great help.

Thanks.

lynseydee

Tixy wrote: »

I try to work out the equivalent APR you are paying now as a starting point. So if its £1 a day and you are in the overdraft everyday of the month and the overdraft was say £2000 then I would say the APR was-

£30/£2000 is a monthly interest rate if 1.5% which is an APR of 19.56% (per this converter - http://www.stoozing.com/calculator/apr-rate-converter.php).

And I put that in to the snowball and the minimum payment as a fixed amount of £30 a month.

This isn't a bad estimate overall if the overdraft is a dormant account, however if it is still your main current account then its only a very rough guide because 1) as you pay off the balance the effective APR actually increases and 2) you may not be paying the daily charge everyday and only paying towards the end of the month.

That's a great starting point and is a great help.

Thanks.