This OD interest calculator shows what an overdraft costs for the time you actually use it. An overdraft lets you draw money up to a limit and pay interest only on the amount drawn, only for the days it stays drawn. Enter how much you have used, the yearly rate and the number of days; the result shows the interest for that period, per day, per full month and per full year.
It works for overdrafts against fixed deposits, salary overdrafts, business cash credit limits and overdrafts against property or securities.
At a glance
- FormulaAmount drawn × rate × days ÷ 365
- Example₹2 lakh drawn at 11% for 45 days
- Interest₹2,712
- Per dayAbout ₹60
- ChargedUsually debited monthly to the account
- Against an FDTypically one to two points over what the FD earns
How the OD interest calculator works
Banks work out overdraft interest on the daily debit balance: each day's balance × yearly rate ÷ 365. They add up the daily amounts and debit the total to the account, usually at the end of each month. If you draw ₹2,00,000 and keep it out for 45 days at 11%, the interest is 2,00,000 × 11% × 45 ÷ 365 = ₹2,712, about ₹60 a day.
If the drawn amount changes from day to day, use the average balance, or run the calculator once for each stretch of days and add the results. Because the monthly debit is added to your balance, unpaid interest does start to earn interest in the following month.
Overdraft vs personal loan
| Point | Overdraft | Personal loan |
|---|---|---|
| Interest charged on | Only the amount drawn, only for days used | The full loan from day one |
| Repayment | Flexible; repay any time | Fixed EMIs |
| Best for | Short or uneven needs | A fixed need repaid over years |
| Risk | Easy to stay in debt | Clear end date |
For a one off sum you will repay over two or three years, a personal loan keeps you disciplined. For a few weeks of cash gap, an overdraft is usually cheaper.
Overdraft against FD: a cheap short term option
Banks commonly lend up to nine tenths of an FD as an overdraft, priced a point or two above the deposit rate. Your FD keeps earning interest. If your FD earns 7% and the overdraft costs 8%, the net cost of borrowing is about 1% a year on the amount used. That is often far cheaper than breaking the FD early and losing interest; compare with the FD premature withdrawal calculator.
Example: ₹5,00,000 drawn for 30 days at 8% costs ₹3,288 in interest, against which your FD keeps earning.
Cash credit and business overdrafts
Businesses often have a cash credit or overdraft limit secured by stock and receivables. Interest works the same way, on the daily balance. Banks may also charge a fee on the sanctioned limit, penal interest if the limit is exceeded, and expect regular turnover through the account. An unused limit costs little; a limit that stays fully drawn for months behaves like an expensive loan. Comparing the year's interest with a term loan in the business loan EMI calculator shows which suits your pattern.
Keeping overdraft costs low
- Deposit receipts into the OD account itself, so each rupee reduces the interest at once.
- Use it for gaps, not as permanent capital.
- Watch the renewal date and any annual fee.
- Never exceed the limit; penal interest and returned cheques add up quickly.
For loans with fixed EMIs, see the EMI calculator. For a plain interest question between two dates, the dates tool counts the days for you.
Frequently asked questions
How is overdraft interest calculated?
On the daily amount drawn: balance × rate × days ÷ 365, added up and debited monthly. ₹2 lakh for 45 days at 11% costs ₹2,712.
Do I pay interest on the full overdraft limit?
No, only on the amount you use, for the days you use it. Some banks charge a small fee on the limit.
What does borrowing against my FD cost?
Typically 1 to 2 percentage points higher than what the FD pays. The FD keeps earning its own interest.
Is an overdraft cheaper than a personal loan?
For short or uneven needs, usually yes, because you pay only for what you use. For a long fixed need, a loan's discipline can save money.
When is overdraft interest charged?
Normally at month end, as a debit to the account.
Does this OD interest rate calculator suit cash credit?
Yes. Cash credit interest works on the same daily balance method.