This calculator requires the use of Javascript enabled and capable browsers. This script calculates the APR (annual percentage rate) for very short term bank loans, typically $1000 or less, known as Transfer Account operations. These can be short term loans that are not for a year (or the weak of heart) or they can just be transfers from one of your accounts to another; most often, they are not even for a month or a week... just 1 day or less, though all banks use a minimum of 1 day. Hence, the APR when calculated is excessive and well beyond what would normally be termed as "loan sharking" or "interest gouging". But these are from banks! They are there to HELP you! This should be an eye opener for you; this is normally one of the most profitable departments in ANY bank. However, they are legitimate in all states; and in certain cases for many people, there is a place and need in life for these types of loans. They are certainly NOT for everyone and should NOT be used regularly. To use this calculator, make an entry in dollars and cents to the loan amount field, the loan fee (or fees and charges) in dollars and cents and a repayment time in days. Click on Calculate and see the (often terrifying, certainly expensive) APR for this loan service. You may click on Clear Values and do another. You MAY enter a decimal for entries in all fields but do not enter any commas or dollar signs (, or $). You MUST have at least 1 day, some positive amount of a fee and a positive loan amount.
Here is our scenario... You are a careful monitor of your own bank account and you have never had an overdraft. You have your acount at the local bank and you (wisely) signed up for overdraft protection. For this bank, it is an automatic transfer from your savings account to your checking account if the checking account drops below zero (0) or below a pre-designated amount. You have had some extra expenses as of late. An online charge that you made but neglected to notate in your register has hit the account and left you with a $23.50 negative amount. Your automatic overdraft protection kicks in and rather than cause you a problem, the bank transfers $35.00 from your savings into your checking account; enough to cover your overdraft and their fee but still leave you with a positive balance. That fee is $7.50 to do the transfer and to NOT charge an overdraft fee (typically $20 or more). Since it took place in the same night's data processing, it actually did not take any time but it is considered 1 day. You used (in reality) $35.00 for a period of time FROM YOURSELF via transfer. You borrowed $23.50 (plus the fee since you went negative in the account) from the bank for a few moments while the computer made a transfer in the run, plus the number of days you floated the money, perhaps unknowingly. Usually an online charge appears within 5 working days in your account. Let's say 7 to be safe and it cost you $7.50. The total amount due for repayment is $7.50 and it is immediate; sending your own money back to savings is optional BUT the transfer COULD cost you a fee for that! The APR calculated is a staggering 1261.52%; if you calculated it for the actual 1 day or less that the bank "loaned you" $31.00 ($23.50 + $7.50), it is 8830.64%! You might want to rethink this... This is the formula:
