monzo overdraft calculator

How this Monzo overdraft calculator works

This calculator gives a practical estimate of overdraft interest for short-term borrowing. You enter four things: the amount you are overdrawn, how many days you stay in overdraft, your annual rate, and any interest-free buffer. It then estimates your interest cost and total repayment amount.

Because banks can apply interest in slightly different ways, this tool includes two methods: an EAR-style daily equivalent and a simple APR/365 approach. For most people and short time periods, the two results are close, but not always identical.

Inputs you should check first

• Your actual overdraft rate: It may be specific to your account.
• Arranged overdraft limit: This calculator assumes arranged borrowing only.
• Exact days overdrawn: Even a few extra days can add cost.
• Any fee-free amount: Some users may have a buffer where interest is not charged.

Formula used in the calculator

1) Chargeable balance

We first reduce your overdraft usage by any interest-free buffer:

chargeable amount = max(0, overdraft used - buffer)

2) Daily rate

Depending on your selected method:

• EAR-style: daily rate = (1 + annual rate)^1/365 - 1
• APR-style: daily rate = annual rate / 365

3) Total interest estimate

• EAR-style: interest = chargeable × ((1 + daily rate)^days - 1)
• APR-style: interest = chargeable × daily rate × days

Example scenario

Suppose you are £300 overdrawn for 20 days at 39% annual rate with no buffer. The calculator will show a daily rate and estimated interest, then add that interest to the original £300 to display a total repayment amount.

If you cut those 20 days down to 10 days, the interest drops substantially. This highlights one of the biggest levers: getting out of overdraft faster usually matters more than tiny changes elsewhere.

Ways to reduce overdraft cost

• Shorten time overdrawn: Move payday funds early when possible.
• Lower average balance used: Even partial repayments reduce interest.
• Build a small buffer: A dedicated emergency pot helps avoid dipping into overdraft.
• Review regular bills: Move due dates closer to payday to avoid temporary shortfalls.
• Compare alternatives: For longer borrowing periods, a lower-rate option may be cheaper.

Common questions

Does this include unarranged overdraft fees?

No. This page estimates interest on arranged overdraft usage only. If you exceed limits or face additional fees, your real cost can be different.

Should I use APR or EAR mode?

If your product information is presented as EAR, the EAR-style option is often a better approximation. If you want a straightforward linear estimate, use APR/365.

Is overdraft always bad?

Not necessarily. Used briefly and intentionally, it can smooth cash flow. Problems usually arise when overdraft becomes persistent month to month. The goal is to reduce both frequency and duration.

Final thought

The best overdraft strategy is simple: borrow less, borrow for fewer days, and check your actual account terms regularly. Use this Monzo overdraft calculator to plan ahead, avoid surprises, and make better short-term money decisions.