# AER on overdraft. monthly interest calculation?

Found 4th Aug 2016
I have £1500 agreed overdraft at 19.9% AER. If i were to to use the £1500 every month, how much interest will i pay every month?

Debit interest is likely to accrue on a daily basis, therefore it is impossible to calculate as the balance is likely to be different each day as transactions occur.

Unless you are saying that the balance will be £1500 overdrawn for every day of the month
let's say it was exactly £1500 for every day of the month?
It would be roughly £300 a year ,or £25 a month . If you were £1500 overdrawn all month .
Edited by: "rogparki" 4th Aug 2016
£1500 x 19.9% / 365 x 31 = £25.35
Based on a static balance and a 31 day charging period.
Thanks guys.
I have a mortgage balance of £30600 @1.49% (0.99 above Base rate). if I increase my monthly payments to £1295 I can pay off my mortgage in just 2 years.
So for £20-£25 a month it's not a bad deal.
You need to look at you calculations again borrowing @ 19.9% to pay off a debt @ 1.49% is not going to end well.
earthlling

I have a mortgage balance of £30600 @1.49% (0.99 above Base rate). if I … I have a mortgage balance of £30600 @1.49% (0.99 above Base rate). if I increase my monthly payments to £1295 I can pay off my mortgage in just 2 years. So for £20-£25 a month it's not a bad deal.

No no no no no . Do not know what you are basing your figures on but that will never work . You will pay your mortgage off and replace it with a mountain of unsecured debt at ten times the rate of interest . What are you increasing your payments from ? Don't forget it isn't just the interest , you still have to repay the capital
Edited by: "psychobitchfromhell" 5th Aug 2016
psychobitchfromhell

No no no no no . Do not know what you are basing your figures on but that … No no no no no . Do not know what you are basing your figures on but that will never work . You will pay your mortgage off and replace it with a mountain of unsecured debt at ten times the rate of interest . What are you increasing your payments from ? Don't forget it isn't just the interest , you still have to repay the capital

calm down driver
tamboss

calm down driver

I've worked in banking for far too long . I've seen people run up unsecured debt of hundreds of thousands of pounds just by taking out interest free credit cards and not paying them off . It is far easier to get into debt than get out of it . Op needs to realise that they have to pay off the £1500 overdraft from the previous month before they so much as buy a loaf of bread the following month . It may sound logical to you but sometimes people do not think logically . Paying your mortgage off early is great but not if you are borrowing from elsewhere to do it
earthlling

Thanks guys.

No, No, No , The figures given were for One £1500 overdraft . You are talking about an increasing overdraft of £1500 a month oO . ie month 1 £1500 , month2 £3000 etc month 24 would be £36000 and at 19.99% APR would cost you about £720 per month in interest and an increasing debt of £36000 . Don't even think about it oO (the bank wouldn't let you anyway) . £1500 would be your max overdraft not £36000 !

Edited by: "rogparki" 5th Aug 2016