Overdraft or Personal Loan: Which Costs Less?
When you need cash quickly, it's common to weigh an overdraft against a personal loan. An overdraft lets you draw and repay freely within a limit, which is flexible, while a personal loan gives you a fixed amount upfront that you repay on a set schedule. Because the two products are typically priced at different interest rates, the actual cost for the same amount can differ significantly.
This calculator takes the amount you expect to use, how long you'll use it, and the interest rate on each product, then estimates the interest cost for both and tells you which one is cheaper. Personal loans are often priced lower than overdrafts, but since an overdraft only charges interest on what you actually draw, your real-world cost can shift depending on your usage pattern.
If your funding needs are uncertain or fluctuate, an overdraft's flexibility is worth the trade-off. If you know exactly how much you need and need it all at once, a lower-rate personal loan is usually the cheaper path. Use this calculator alongside your actual spending pattern to decide.
Frequently Asked Questions
An overdraft lets you draw and repay freely within a limit whenever you need to, while a personal loan gives you a fixed lump sum upfront that you repay on a set schedule.
Using the same amount for the same period, the interest cost is roughly similar. But an overdraft only charges interest on what you actually use, so your total cost can vary with your usage pattern.
If your funding needs are uncertain or fluctuate frequently, an overdraft's flexibility helps. If you need a specific, known amount all at once, a lower-rate personal loan is often cheaper.