Everything About Korean Overdraft Interest
A Korean overdraft account ("minus tongjang", a credit line loan) lets you borrow and repay freely within an agreed limit. Unlike a lump-sum loan, interest accrues only on the amount you actually use, for the days you use it. Interest is computed daily as amount × annual rate × days ÷ 365 (simple interest), and this tool estimates it in advance.
Overdraft rates are typically around 0.5%p higher than regular personal loans, because the bank must keep the full limit available at all times. In exchange, you can deposit and withdraw freely — ideal for people with variable expenses or workers who can repay irregularly with bonuses. Every salary deposit automatically reduces the outstanding balance and saves interest.
This calculator offers two modes. Average-usage mode assumes a constant balance for quick estimates, while period mode sums interest across segments like "5M KRW for 30 days, then 10M KRW for 60 days" when your usage changed over time. Pick whichever is closer to your actual pattern for a better estimate.
Pro tip: real banks calculate interest on the exact daily negative balance and add accrued interest to the principal on settlement dates (usually monthly or quarterly), creating a compounding effect. Depositing at least the accrued interest before each settlement date blocks that compounding. Also note that the overdraft limit counts as debt under Korean DSR regulations, so consider closing unused limits before applying for a mortgage.