How overdraft interest is computed
Daily interest = used balance × annual rate ÷ days-in-year. The bank sums each day's charge over the month and posts a single debit. Some banks also levy a small commitment / unused-line fee on the unused portion of your sanctioned limit — added in the optional field.
If your balance changes during the period (which is normal — overdrafts behave like checking accounts), use the day-by-day schedule and add a segment per balance change.
FAQ
Is OD interest cheaper than a personal loan?
Often yes — secured overdrafts (against FD, property) can run 7–10% p.a. against 13–18% for personal loans. Unsecured ODs (current accounts) are usually similar to a personal loan rate.
What's the day-count basis?
Indian bank ODs almost always use actual/365 (sometimes 366 in leap years). US-style cash-management products use actual/360 — that bumps the effective rate by ~1.4%.