Definition of Debit Interest

Banks, lenders and other companies will often set up customer accounts to either take deposits or loan money for individual or business purposes. Debit interest is a fee or penalty assessed on these accounts.

Defined

For bank accounts, debit interest is a penalty for customers who overdraft their account by spending more money than is in the account. Debit notes--which represent a loan between parties--may have fees or penalties for late payments or loan default.

Features

Bank account debit interest is often a flat fee for overdrafts, such as $25 or $50. The flat fees may increase for repeated offenses. Debit note interest may be 1 or 2 percent of the unpaid balance and other fees.

Considerations

Individuals and businesses will often have different debit interest amounts or percentages assessed on their accounts. For example, business accounts may be higher because these accounts have more activity and a greater chance or overdraft or default.

References

• BankingDictionary.com: Debit Interest
• QFinance.com: Debit Note