It happens to everyone to know the ends of difficult months and to be forced to resort to bank overdraft. If a flow limited to a few days does not entail excessive interest , the bill can be particularly heavy in case of prolonged overrun. Here is what you cost each day these “facilities” banking.
The cost of an overdraft authorized
For accounts of individuals, the fee essentially comprise the interest of the overdraft , calculated according to the rate which appears in the agreement signed at the opening of the account. But the term includes more broadly all operating costs .
So, do not be surprised at the use of the term fee in the bill (1), when you have never been exposed.
Calculate the amount of the fee of an authorized overdraft
The quarterly order sent by the bank repeats the periods concerned and the amount of the fee collected but does not allow in any case to establish an accurate calculation of what has cost the overdraft each day.
To calculate the amount yourself, three variables must be considered and the following method applied.
- The rate (indicated in the agreement)
- The amount of the debit
- The duration expressed in days
The three-step number method
As a first step, the bank applies for each overdraft amount the interest rate calculated on the number of debit days. Applying the following formula yields a result called number .
|Number = Amount of flow * Number of days|
In a second step, all the numbers are added to find the total number of the quarter. Each time the amount of the flow changes, a new period opens, requiring the calculation of a new number. Thus, a flow of 50 € for 4 days gives a first number. If the overdraft reaches 75 € on the 5th day, the bank calculates a new number based on the new amount and so on.
|Total number of period = (Number period 1 + Number period 2 + Number period 3 …)|
Finally, the last step, the bank calculates the interest as follows:
|fee = (Total number of the period * Rate) / 365|
|Calculation of Total Quarterly Number|
|periods||Amount of overdraft||The number of days||Calculation||Number|
|P1||$ 185||4||185 * 4||740|
|P2||$ 312||6||312 * 6||1872|
|P3||$ 333||7||333 * 7||2331|
|Total number of the quarter||4943|
Calculation of the fee : (4943 * 11%) / 365 = 1,49 €
Good to know : some banks offer a commercial exemption of fee within the limit of an amount and a duration defined in advance. (example: free discovery up to 500 € for 8 days)
The cost of an unauthorized overrun
This calculation is valid only within the framework of an authorized overdraft. The costs of an overrun not granted by the bank will result in much higher fees. In addition to the fee on the debit (as seen above), the bank charges a high price for its intervention.