Overdraft Fee Annual Cost Calculator

An overdraft on a current account is a short-term borrowing facility, and short-term borrowing is among the most expensive forms of credit a household uses. The headline daily fee looks small, but multiplied across the days in overdraft and again across twelve months it builds into a meaningful annual outflow. This calculator turns the daily fee, the days overdrawn each month, the typical overdraft balance, and any monthly cap into a single annual figure so the cost is visible at the cadence the rest of the budget runs on.

Run it with the defaults

The default scenario uses a typical overdraft balance of 500, fifteen days per month overdrawn, a daily fee of 1, and a monthly fee cap of 80. Those defaults produce an annual cost of 180, expressed in whichever currency is selected at the top of the page. Change the inputs to match the values on a real account statement and the figure recalculates instantly. The defaults are a starting point for orientation, not a benchmark for what an overdraft should cost.

The levers in this calculation

Four inputs drive the result: Typical Overdraft Balance, Days Per Month Overdrawn, Daily Fee, and Monthly Cap (0 for None). Days and daily fee multiply directly into the monthly cost. The monthly cap, if set, limits the worst case but only bites in months where days × daily fee exceeds it. The typical overdraft balance does not feed into the fee total directly under this fee model — fees are charged per day of being overdrawn, not as a percentage of the balance — but it is used to express the annual cost as a percentage of the amount being borrowed, which makes the result comparable to other credit products quoted as rates.

How the math works

The arithmetic runs in four steps. Raw monthly cost is days × daily fee. Capped monthly cost is the smaller of raw and the monthly cap, or simply raw if the cap input is 0. Annual cost is capped monthly × 12. Cost as a percent of balance is annual cost ÷ typical balance × 100, expressed as an annual ratio rather than a true effective annual rate, because the fee structure is per-day rather than rate-on-balance. Every step is shown in the formula section below.

What the cap-vs-no-cap example looks like

At a daily fee of 1 and twenty-two days per month overdrawn, raw monthly cost is 22. Capped at 15 monthly, capped cost is 15 — the cap saves 7 each month, or 84 across the year. With no cap (input of 0), monthly cost stays at 22 and annual cost reaches 264. The cap savings only materialise in months where the days × daily fee total exceeds it.

What this calculation does not capture

The figure assumes the same daily fee, same number of days, and same balance every month for a year. Real account histories are noisier than that — fees change, days vary with payday timing, balances drift up and down. The annual figure is a useful planning number rather than an exact prediction. It also does not account for any interest charges separate from daily fees, unauthorised overdraft penalties, or returned-payment charges, which some account structures stack on top of the daily fee.