So I'm thinking on getting a overdraft in my bank, it says that the interest is 15% annually, however I only need little money to cover something before the end of this month, I can pay that amount in its entirety with October's salary without any issues, but what I don't have clear is how much interest would I be paying, the entire 15% or a fraction of it considering I would be paying it back right away?.
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It depends on your bank and the details in the agreement, but typically, interest is calculated daily. So if you borrow 1000 EUR for 1 day, you pay 15% * 1000 EUR * 1/360 = 42 Cent (41.666667 cent to be exact).
You can simply multiply these 42 cent up with the number of days you plan and the number of 1000s EUR. Note that weekend days count too, even if you cannot pay them back on the weekend.
The exact value will be very slightly different, as the interest is added monthly to the principal, and there is compound interest on the interest. Banks also often consider all months 30 days long for interest calculations.
Aganju
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