Imagine a scenario in which you are using your debit card to go shopping. You are unaware that your checking account balance had decreased to $12. Thinking that you have more money available, you use your debit card to pay for a $14 item. Because of the way your account is set up, the bank allows the charge to go through and overdraws your account. When you check your account balance the next day, you realize your mistake. Your transaction brought your account balance to -$2. In addition, you learn that the bank automatically charged you a $35 overdraft fee, resulting in a checking account balance of -$37. You immediately deposit money in the account to make your balance positive. The negative balance lasted 24 hours.

What is the effective APR of the $2 amount by which you overdrew your account?

Hint: the APR in this instance is charged in the form of a fee. First, calculate the percentage of interest charged for the $2 the bank lent you for a period of 24 hours. Remember: the APR rate is the annual rate.