Business banking helper

Overdraft (OD) Daily Interest Calculator

See the real daily cost of your overdraft utilisation, compare 365 vs 360 day convention, and understand how quickly OD interest adds up on your cash flow.

1. Enter your OD utilisation details

Use your latest OD statement or internal cash flow estimate. Calculations update instantly as you type.

Utilised amount Average outstanding OD amount for the period.
RM
Example: if your OD hovers around RM50,000 for most of the month, enter 50000.
OD limit (optional) Full sanctioned limit to show utilisation percentage.
RM
This does not change interest, but shows how much of your limit you are using.
Annual OD interest rate Bank's quoted OD rate per year.
%
For BLR or BR plus spread, use the effective annual rate (for example 8.50).
Number of days utilised How many days you keep this utilisation.
days
For a full month, you can use 30 days. For short term usage, you can try 7, 10, 15 days and so on.

Tip: Play with different amounts and days to see how much short term OD usage really costs you compared to a term loan or temporary bridging finance.

2. Daily interest and total cost
Figures are estimates based on simple daily interest. Always refer to your actual bank statement.
Daily interest cost
RM -
Interest cost for this period - days
RM -
Estimated monthly cost Based on 30 day month
RM -
Estimated annual interest cost If utilisation stays the same all year
RM -

Enter a utilised amount and OD limit to see your utilisation percentage.

Daily interest rate
- % per day
Total interest rate for this period
- % of utilised amount
Year length convention
365 day year
Quick interpretation
Waiting for inputs...
How OD interest grows over time
Preview interest build up from day 1 to day 30.
Higher interest
Lower interest

Disclaimer: This calculator provides an estimate of interest based on simple interest applied daily. It does not account for specific bank compounding methods, commitment fees, service charges, minimum interest rules, or weekend/public holiday conventions. Always confirm the actual charge with your bank statement and facility letter.

How overdraft (OD) interest really works

An overdraft facility is often sold as flexible working capital. Unlike a term loan with fixed monthly instalments, OD interest is normally charged on the actual amount you use, for the number of days you use it. That flexibility is useful, but it also makes the true cost harder to see, especially for busy business owners.

OD interest vs term loan interest

With a term loan, your bank schedules a fixed repayment plan. The interest is usually calculated on a reducing balance and spread across monthly instalments. You can see clearly how much you pay every month.

With an overdraft, the bank approves a limit, for example RM300,000, and you draw and repay as needed. Interest is charged daily on the utilised amount. If you keep RM150,000 outstanding for 10 days then bring it down to RM50,000, the interest will track those day by day changes. This is powerful, but without a calculator it is easy to underestimate the cost.

365 day vs 360 day convention

Many facilities calculate daily interest using a 365 day year, but some commercial facilities and older contracts still use a 360 day year. For the same annual rate, using 360 days makes the daily rate slightly higher, so total interest paid across the year will also be slightly higher. This tool lets you switch between the two conventions so you can see the difference clearly and ask informed questions when negotiating.

Practical tips for managing OD facilities

  • Treat your OD as short term working capital, not as a permanent long term loan. Long term usage at high utilisation can be more expensive than refinancing into a structured term loan.
  • Monitor your average utilisation, not just your limit. A business with RM500,000 limit and RM80,000 average usage is in a very different position compared to someone who is constantly at 90 percent utilisation.
  • When you receive customer payments, consider sweeping down your OD first, then redrawing when needed. Reducing the number of high utilisation days directly reduces interest cost.
  • Use a simple internal dashboard where you record daily or weekly OD balances. Combined with a tool like this, you can estimate your monthly interest before the statement arrives.

When to relook at your financing structure

OD facilities are useful, but they are not always the most efficient solution. It may be time to discuss a restructuring with your bank if:

  • Your OD is above 70 to 80 percent utilisation for most of the year.
  • You are using OD to finance long term assets such as machinery or property.
  • You struggle to bring the utilisation down even when sales are stable.
  • The effective interest cost is higher than what you could obtain with a term loan or other products.

In those cases, converting part of the OD into a term loan or flexi loan can sometimes lower your overall cost while freeing up OD limit for true short term needs such as seasonal stock, trade cycles, or temporary delays in customer payment.

This explanation is for general education only and does not replace your facility agreement or professional financial advice. Different banks and products may use slightly different methods, fees and conventions. Always refer to your own facility letter and talk to your banker, accountant, or financial advisor before making financing decisions.