Overdraft Refund Calculator

If you were stuck in your overdraft for years, paying interest every month and never getting back to zero, your bank may have been required to step in and stop it. Where it did not, the interest and charges you paid can be refunded. This page estimates what that refund could be worth and explains how the calculation actually works.

Estimate your overdraft refund

In this guide

• When an overdraft becomes a claim
• What a successful overdraft refund includes
• A worked example
• Why the interest figure changed in 2026
• What the calculator cannot know
• Frequently asked questions

When an overdraft becomes a claim

An overdraft is not unaffordable simply because it is expensive. The complaint turns on repeat use: a pattern where you were continuously overdrawn, month after month, with the balance never really reducing, while the bank kept charging interest and did nothing about it.

The Financial Conduct Authority set rules for exactly this situation in CONC 5D of its Handbook. Banks must monitor the pattern of drawings and repayments on every overdraft, identify customers showing repeat use as early as possible, and then intervene in a way that is appropriate and proportionate. The aim of the rules is to reduce that use and improve the customer's financial situation.

Intervening means contacting you, pointing out the pattern, flagging the avoidable cost, and helping you find a way out. If your bank simply carried on collecting interest from an account that was permanently overdrawn, that is the failure a complaint is built on.

The signs that usually matter:

• You were overdrawn on every single payday, with your salary immediately swallowed by the balance.
• The overdraft limit was increased, sometimes more than once, rather than reduced.
• You were paying interest for years without the balance meaningfully falling.
• You were also missing payments elsewhere, or borrowing on cards and loans to cope.
• The bank never contacted you about it, or contacted you and then did nothing.

What a successful overdraft refund includes

Redress is designed to put you back, as far as money can, in the position you would have been in if the bank had acted when it should have. In practice that means four things.

A refund of the overdraft interest and charges applied from the point the bank should have intervened. You keep the money you actually spent, because you had the use of it. What comes back is the cost of the borrowing the bank should have stopped.

Ombudsman interest on top, to reflect that you were without that money for the period since you paid it. This is a simple rate, not compound, and it is added to each refunded amount from the date you paid it until settlement.

Basic-rate tax deducted from the interest element only. The bank takes 20% off the interest at source and pays it to HMRC. Higher-rate taxpayers may owe more; non-taxpayers can often reclaim it. The refund of the charges themselves is not taxed.

Correction of your credit file, removing any markers linked to the unaffordable overdraft use.

A worked example

Take someone who sat about £1,200 into a £1,500 overdraft for four years, on a fairly typical 39.9% rate, and who still owes the £1,200 today.

• Interest and charges over the period: roughly £1,915.
• Ombudsman interest at 4.75%, averaged across the period: about £182.
• Less 20% tax on that interest: −£36.
• Total redress: around £2,061.
• Because the overdraft is still outstanding, the refund clears the £1,200 balance first.
• Cash actually paid out: roughly £861, and the overdraft is gone.

That last step surprises people. If you are still overdrawn, the refund does not arrive as a cheque. It pays off what you owe, and only the surplus reaches your account. That is still a real gain, because the debt disappears, but it is not the same as cash in hand.

Why the interest figure changed in 2026

For nearly 25 years the Financial Ombudsman Service added 8% simple interest to redress awards. A great deal of published guidance still says so.

That changed on 1 January 2026. Following consultation, the default interest rate now tracks the Bank of England base rate plus one percentage point, calculated as a weighted average over the period from when you lost the money to when redress is paid. With base rate at 3.75%, that is 4.75% at the time of writing.

Two things to keep straight:

• The 8% rate still applies to complaints referred to the Ombudsman up to and including 31 December 2025, even if they are decided later.
• The Ombudsman can also still order 8% where a firm pays an award late. That is a penalty for delay, not the rate on the award itself.

If you have seen a much larger interest figure quoted elsewhere, this is usually why. The calculator above uses the current rate, because it is aimed at people starting a complaint now.

What the calculator cannot know

The estimate above spreads an average balance across an even period. A real calculation does not work that way. It uses the actual interest and charges shown on your statements, month by month, from a specific intervention date.

That date is the single biggest variable. Choose a date two years earlier and the refund can double. Where exactly the bank should have stepped in is a judgement about your circumstances, and it is the thing most often argued over.

The calculator also cannot see whether your bank has already refunded charges, whether the account was in a formal arrangement, or whether other lending of yours is in the picture. Treat the number as a sense of scale, not a promise.

Frequently asked questions

Will I get an exact figure from this?

No. It gives you an order of magnitude so you can decide whether the complaint is worth making. Only your statements and a decision on the intervention date can produce a real number.

What if my overdraft is already cleared?

Better, from a cash point of view. With nothing left to offset, a successful complaint is normally paid to you directly.

Can I complain about an overdraft I closed years ago?

Usually yes. Complaints are generally expected within six years of the event, or three years from when you reasonably became aware of a problem, and the Ombudsman can consider older cases in some circumstances. It costs nothing to ask.

Do I need a claims company?

No, and you should know that before you decide. You can complain to your bank yourself free of charge, and escalate free to the Financial Ombudsman Service if you are not satisfied after eight weeks. Our free complaint letter tool will write the letter for you.

Related guides

• How redress is calculated
• Overdrafts and unaffordable lending
• Free complaint letter generator
• Escalating to the Financial Ombudsman

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