Help Calcualting my Overdraft Formula please.

kwiksaver

Can anyone please help me work out my overdraft charges and the formula for how its calculated please?

My bank says it charges 18.9% EAR on the overdraft with no daily charge.

Its also says 1.453% arranged overdraft interest rate on the monthly statements which is confusing!

Last month I was overdrawn by...

-£421.42 x 7 days

-£431.42 x 3 days

-£457.21 x 1 day

The monthly charges came out at £1.93

I have googled and googled but my pea brain cant work out the formula for this!

Thanks guys

eskbanker

kwiksaver wrote: »

My bank says it charges 18.9% EAR on the overdraft with no daily charge.

Its also says 1.453% arranged overdraft interest rate on the monthly statements which is confusing!

These figures reconcile because the EAR is the annual figure that you'd pay if the monthly ones compounded (with no repayments), so if you were overdrawn by £1,000, after one month that would become £1,014.53, which would then become £1,014.53 * 1.01453 = £1,029.27 after two months, and so on until after a year the balance would be £1,189.

I'd expect that monthly 1.453% to equate to a daily charge of 1/30 or 1/31 of that figure and be applied on a daily basis to your balance but I can't make either figure reconcile with your £1.93, but as either version works out over £2, you've come out ahead!

kwiksaver

Ah thanks alot for this! So you think something like this?..

-£421.42 x 7 days

-£431.42 x 3 days

-£457.21 x 1 day

£421.42/100 x 1.453 / 31 = £0.20 x 7 days = £1.4

£431.42/100 x 1.453 / 31 = £0.20 x 3 days = £0.6

£457.21 / 100 x 1.453 /31 = £0.20 x1 day = £0.2

Im also getting £2.20 this way

Get the logic and happy im up by 30p this way but it must be slightly different calculation i guess?

Hazzanet

Is it possible that some of the charge has fallen in the next charging period and will be billed next month?

kwiksaver

Hazzanet wrote: »

Is it possible that some of the charge has fallen in the next charging period and will be billed next month?

Ah yes thats it! the last amount for 1 day was on the final day! taking that off brings it to round about the right figure !


Cheers guys