Estimate your monthly and annual overdraft costs based on your facility limit, average usage, and fees. Compare against a line of credit and term loan to find the best fit.
| Average balance overdrawn | $25,000 |
| Interest rate (p.a.) | 10.00% |
| Monthly interest | $208.33 |
| Monthly account fee | $30 |
| Total monthly cost | $238.33 |
| Annual cost | $2,860 |
Comparing costs for the same $25,000 drawn amount.
| Product | Monthly cost | Annual cost |
|---|---|---|
| Business overdraft(your inputs) | $238.33 | $2,860 |
| Line of credit | $208.33 | $2,500 |
| 5-year term loan | $506.91 | $6,083 |
Set your average drawn amount to 10-20% of the limit. This models businesses that only dip into the overdraft around payroll or supplier payment dates. The cost is low but you are paying the monthly fee whether you use the facility or not.
Set your average drawn amount to around half the limit. This is common for seasonal businesses that regularly rely on the facility. Compare the annual cost to a line of credit to see which is cheaper at this usage level.
If you are consistently at or near the limit, the interest cost adds up quickly. At this point, a term loan for the same amount at a lower rate may save you thousands per year. Use the comparison table below to check.
Review the comparison table to see how your overdraft stacks up against a line of credit (with facility fee) and a 5-year term loan for the same drawn amount. The right choice depends on whether you need flexible access or a fixed repayment plan.
You only pay interest on the amount you have actually overdrawn, not on the full facility limit. If you draw nothing, you pay only the account fee (if any).
Unlike a term loan, there is no fixed repayment schedule. You can draw and repay as often as you need, up to the approved limit. This makes overdrafts ideal for unpredictable cash flow gaps.
Most overdraft facilities charge a flat monthly or annual account keeping fee regardless of usage. This is a fixed cost you should factor in when comparing to other credit products.
Interest and fees on a business overdraft are generally tax deductible as business expenses, provided the funds are used for business purposes. This reduces the effective cost of the facility.
Compare overdraft and line of credit options from 50+ lenders.
Subject to lender approval, terms and conditions apply.
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Results are estimates only and should not be relied upon for financial decisions. Actual business overdraft repayments will depend on the lender, your credit profile, and the specific terms offered. Interest rates used are for illustration purposes only and may not reflect current market rates.
Subject to lender approval, terms and conditions apply.
This calculator is general information only and is not financial advice.