what would the interest be on £17000 at an annual rate of 19.94%

Question

I paid a cheque into my account and the bank lost it . They say they will compensate me, I have just looked at their fees, if I had gone over drawn by £17,000 they would charge me 19.9 %equivalent annual rate. How much would that be a day ?

Answer 1

The AER=((1+(r/365))^365)-1 where r is the nominal annual rate and compound interest is applied daily.

1.1994=(1+(r/365))^365, making 1+(r/365)=1.000498265. r/365 (=0.000498265) is the nominal daily rate so on £17000 this would be £8.47 interest. (The nominal annual rate is about 18.19%.)