Skip to content

Home / Free tools / Overdraft cost calculator

What your CC/OD line really costs, not just its rate.

The rate on your sanction letter is only part of the price. Add renewal fees, stock audit and other charges, allow for monthly compounding, and divide by what you actually draw. This calculator does that, and shows what faster collection is worth.

All figures in ₹ lakh unless stated. Calculations run in your browser; nothing you enter is sent anywhere.

Use the Calculator
Your facility
₹ lakh
% p.a.

As in your sanction letter: benchmark plus spread.

% of limit

Average daily debit balance as a share of the limit.

% of limit

Charged once a year on the full limit.

% p.a.

Only if your sanction letter levies one. Leave at 0 otherwise.

₹ lakh

Stock audit, inspection, documentation, legal and valuation.

What would faster collection save?
₹ lakh
days

How it is worked out

Item Formula Notes
Average drawn Limit × average utilisation Interest is charged only on the debit balance.
Effective interest rate (1 + rate ÷ 12)12 − 1 Interest debited monthly is itself charged interest in the following months.
Interest cost Average drawn × effective interest rate
Fees and charges Limit × fee % + unutilised limit × charge % + other charges Plus 18% GST if you cannot claim credit for it.
Effective annual cost Total annual cost ÷ average drawn The all-in price of every rupee you actually use.
Interest saved by faster collection min(days × revenue ÷ 365, average drawn) × effective interest rate Fees stay the same unless the limit itself is reduced at renewal.

Banks calculate interest on the daily debit balance and debit it to the account monthly, so this calculator is an approximation built on your average. If your utilisation swings sharply within the month, enter the average of daily balances from your bank statement rather than month-end figures.

Reading the result

The headline rate in a sanction letter understates what the line costs. Fees are charged on the full limit, but you only benefit from the part you draw. The lower your utilisation, the higher the effective cost of each rupee used. A limit sized well above need is paid for every year at renewal.

The collection lever shows why this is a working capital question as much as a banking one. Faster collection reduces the drawn balance and saves interest immediately. It only reduces fees if you then negotiate a smaller limit at the next renewal, so treat the two savings separately.

Penal charges

This calculator excludes penal charges. Since the RBI circular on penal charges in loan accounts, a penalty for breaching material terms of a loan, such as late submission of stock statements or covenant breaches, must be levied as a penal charge rather than as additional interest, and no further interest can be computed on it. Your bank's schedule of charges and sanction letter set the actual amounts.

Sources and references

  • Reserve Bank of India, Fair Lending Practice – Penal Charges in Loan Accounts, RBI/2023-24/53, DoR.MCS.REC.28/01.01.001/2023-24, 18 August 2023.
  • GST on bank fees and charges at 18% applies to financial services; whether it is a cost depends on your eligibility to claim input tax credit under Section 16 of the CGST Act, 2017.
  • Rates, fees and charges vary by bank and borrower. Use your sanction letter and the bank's current schedule of charges.

Other free tools

Want these numbers read against your own books?

We work with manufacturing and trading businesses on working capital, cash flow and bank-ready reporting. Start with a discovery call.

Book a Discovery Call