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At what time does the Bank record the Overdraft "used amount" for charging interest for the day?

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kumar111

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As many of us know , interest is charged on the utilised amount of the overdraft limit on a daily basis..

I am curious to know , at what particular time does the Bank will record the 'usage' on the overdraft amount?

For eg : if bank records it at 10pm every day .. that means .If one withdraws amount from overdraft in the morning and deposit it bank before 10pm .... That doesn't count as per the bank as the usage? And no interest is charged?

Waiting for your answers..
 
As many of us know , interest is charged on the utilised amount of the overdraft limit on a daily basis..

I am curious to know , at what particular time does the Bank will record the 'usage' on the overdraft amount?

For eg : if bank records it at 10pm every day .. that means .If one withdraws amount from overdraft in the morning and deposit it bank before 10pm .... That doesn't count as per the bank as the usage? And no interest is charged?

Waiting for your answers..
End of Day Balance is considered .
You utilized it in morning and deposit it by evening, your end of Day Balance remains 0 .
Therefore no interest for that day.

Interest calcution method for Overdraft Account and Savings Account is Same, unless specified otherwise.
 
End of Day Balance is considered .
You utilized it in morning and deposit it by evening, your end of Day Balance remains 0 .
Therefore no interest for that day.

Interest calcution method for Overdraft Account and Savings Account is Same, unless specified otherwise.

A bank calculates interest on an overdraft account based on the minimum balance maintained throughout the day, not the closing balance at the end of the day. If a person withdraws a significant amount in the morning and later deposits it back before the bank closes, the interest will still be charged on the lowest balance recorded during the day. This means that even if the account balance is fully restored by the end of the day, the interest will be applied to the amount that was withdrawn for the duration it remained outstanding.

Additionally, in any overdraft account, the minimum balance and the due amount (the outstanding liability) are reciprocal to each other. A lower balance means a higher due amount, which directly affects the interest calculation.

The same principle applies to savings accounts as well. When a bank pays interest on a savings account, it considers the lowest recorded balance of the day. Even if the account had millions at some point during the day, the interest will be calculated based on the minimum balance that was maintained.
 
A bank calculates interest on an overdraft account based on the minimum balance maintained throughout the day, not the closing balance at the end of the day. If a person withdraws a significant amount in the morning and later deposits it back before the bank closes, the interest will still be charged on the lowest balance recorded during the day. This means that even if the account balance is fully restored by the end of the day, the interest will be applied to the amount that was withdrawn for the duration it remained outstanding.

Additionally, in any overdraft account, the minimum balance and the due amount (the outstanding liability) are reciprocal to each other. A lower balance means a higher due amount, which directly affects the interest calculation.

The same principle applies to savings accounts as well. When a bank pays interest on a savings account, it considers the lowest recorded balance of the day. Even if the account had millions at some point during the day, the interest will be calculated based on the minimum balance that was maintained.
Thanks for sharing, it impacts a lot on very high amount transactions.
 
A bank calculates interest on an overdraft account based on the minimum balance maintained throughout the day, not the closing balance at the end of the day. If a person withdraws a significant amount in the morning and later deposits it back before the bank closes, the interest will still be charged on the lowest balance recorded during the day. This means that even if the account balance is fully restored by the end of the day, the interest will be applied to the amount that was withdrawn for the duration it remained outstanding.

Additionally, in any overdraft account, the minimum balance and the due amount (the outstanding liability) are reciprocal to each other. A lower balance means a higher due amount, which directly affects the interest calculation.

The same principle applies to savings accounts as well. When a bank pays interest on a savings account, it considers the lowest recorded balance of the day. Even if the account had millions at some point during the day, the interest will be calculated based on the minimum balance that was maintained.
can't be true. as this would mean if i have 2 banks accounts with 1L in one and 0 in the other, and make the transfer, then interest is not earned in either banks for that day.
 
can't be true. as this would mean if i have 2 banks accounts with 1L in one and 0 in the other, and make the transfer, then interest is not earned in either banks for that day.

Calculation method by the bank, not clearly visible on the website.

Roughly it's 7 Rs interest on per lakh per day, in S/B SBI payable quarterly.
 
can't be true. as this would mean if i have 2 banks accounts with 1L in one and 0 in the other, and make the transfer, then interest is not earned in either banks for that day.
Yes, no interest for the day.
According to your logic, you would earn interest on both accounts, which is incorrect. If a bank calculates interest based on the minimum balance of the day, then transferring money between two accounts within the same day means both accounts would have had a lower balance at some point. As a result, interest would not be earned on the transferred amount for that day. Interest is calculated based on the actual balance held, not on momentary transfers between accounts.
 
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A bank calculates interest on an overdraft account based on the minimum balance maintained throughout the day, not the closing balance at the end of the day. If a person withdraws a significant amount in the morning and later deposits it back before the bank closes, the interest will still be charged on the lowest balance recorded during the day. This means that even if the account balance is fully restored by the end of the day, the interest will be applied to the amount that was withdrawn for the duration it remained outstanding.

Additionally, in any overdraft account, the minimum balance and the due amount (the outstanding liability) are reciprocal to each other. A lower balance means a higher due amount, which directly affects the interest calculation.

The same principle applies to savings accounts as well. When a bank pays interest on a savings account, it considers the lowest recorded balance of the day. Even if the account had millions at some point during the day, the interest will be calculated based on the minimum balance that was maintained.
Overdraft: Your theory seems more aligned, as it's a limit account.
Savings: What I heard from bankers is EOD, closing balance method.
 
Yes, no interest for the day.
According to your logic, you would earn interest on both accounts, which is incorrect. If a bank calculates interest based on the minimum balance of the day, then transferring money between two accounts within the same day means both accounts would have had a lower balance at some point. As a result, interest would not be earned on the transferred amount for that day. Interest is calculated based on the actual balance held, not on momentary transfers between accounts.
Wrong info.

Interest on sb balance are calculated based on eod balance. This has been the case for a long time. (Mandated by rbi).

Earlier I also thought od was charged on min balance but @sjmajumder pointed out it is based on eod balance. I later cross checked with couple of vendors who use od, they also said the same thing.
 
Wrong info.

Interest on sb balance are calculated based on eod balance. This has been the case for a long time. (Mandated by rbi).

Earlier I also thought od was charged on min balance but @sjmajumder pointed out it is based on eod balance. I later cross checked with couple of vendors who use od, they also said the same thing.
EOD balance method...✔️
 
According to your logic, you would earn interest on both accounts, which is incorrect.
how so? per my logic, only the bank which has the 1L by EOD will give me interest.
Earlier I also thought od was charged on min balance but @sjmajumder pointed out it is based on eod balance. I later cross checked with couple of vendors who use od, they also said the same thing.
right, but nobody knows what EOD exactly is 🤣
 
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