# Overdraft Charges

## Do you understand how your bank charges you for taking out an overdraft? Try this self marking quiz.

##### Level 1Level 2Exam-StyleDescriptionHelpMore Finance

The daily overdraft fee charged by a major high street bank is different depending on how much you borrow. It could include up to three different amounts added together. Here's how it works:

 Up to £1250 Between £1250 and £2500 Over £2500 1pfor every full£6 + 1pfor every full£7 + 1pfor every full£8
 1. What is the daily fee for an overdraft of £438? Working: p 2. What is the daily fee for an overdraft of £422? Working: p 3. If you had an overdraft of £1170 for three weeks how much would the fee be? Working: £ 4. What is the daily fee for an overdraft of £2238? Working: £ 5. What is the daily fee for an overdraft of £3370? Working: £ 6. If you had an overdraft of £1518 for four weeks how much would the fee be? Working: £ 7. If you had an overdraft of £3654 for 100 days how much would the fee be? Working: £ 8. If you had an overdraft of £4687 for 33 days how much would the fee be? Working: £ 9. Chris bought a second-hand car and in doing so found that he now had an overdraft. The daily fee for this overdraft was £3.98. How much was the overdraft (the smallest possible value)? Working: £ 10. Vasos bought a very large TV and in doing so found that he now had an overdraft. The fee for 54 days for this overdraft was £217.08. How much was the overdraft (the smallest possible value)? Working: £
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 This activity is suitable for students of mathematics all around the world. Use the button below to change the currency symbol used to make it more relevant to your students. You may wish to choose an unfamiliar currency to extend your students' experience.

## Instructions

Try your best to answer the questions above. Type your answers into the boxes provided leaving no spaces. As you work through the exercise regularly click the "check" button. If you have any wrong answers, do your best to do corrections but if there is anything you don't understand, please ask your teacher for help.

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## Description of Levels

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Level 1 - Calculating the charges given the size of the overdraft

Level 2 - Problem solving questions about bank overdrafts

Flow Chart Bills - This is a simpler exercise in calculating bills given a flowchart.

Exam Style Questions - A collection of problems in the style of GCSE or IB/A-level exam paper questions (worked solutions are available for Transum subscribers).

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## Curriculum Reference

See the National Curriculum page for links to related online activities and resources.

Overdrafts are a short-term way to borrow money up to an arranged limit. They are one of the most expensive ways of borrowing money so should be avoided it at all possible.

## Examples

### Level 1

If you borrow £500: £500 at 1p for every full £6 (divide 500 by 6 and round down to the nearest whole number) which is 83p

If you borrow £1,600: First £1,250 at 1p for every full £6 which is £2.08; Plus, £350 at 1p for every full £7 which is £0.50 = Daily fee of £2.58.

If you borrow £3,200: First £1,250 at 1p for every full £6 which is £2.08; Plus, £1,250 at 1p for every full £7 which is £1.78; Plus, £700 at 1p for every full £8 which is £0.87 = Daily fee of £4.73.

If an amount is not a whole number of pounds it should be written with two digits after the decimal point.

This system of calculating overdraft charges was introduced by Lloyds Bank UK on 28 January 2018.

### Level 2

If you borrow £200: There will ne no charge.

If you borrow £1000: The first £250 will be free but the rest, £750 will be charged at the rate of 16%. 750 multiplied by 0.16 = £120.

If you borrow £3000: The first £250 will be free but the next £1750 will be charged at the rate of 16% then the last £1000 will be charged at the rate of 12%. 1750 multiplied by 0.16 + 1000 multiplied by 0.12 = £400.

If an amount is not a whole number of pounds it should be written with two digits after the decimal point.

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