Also called: Commitment fee, Non-utilisation fee
Undrawn fee
An undrawn fee, sometimes called a commitment fee, is a charge applied to the portion of an approved limit that has not been drawn. It compensates the lender for holding capital available for you.
What is an undrawn fee?
An undrawn fee, sometimes called a commitment fee, is a charge applied to the portion of an approved limit that has not been drawn. It compensates the lender for holding capital available for you.
Example
On a $400,000 limit with $150,000 drawn, an undrawn fee of 0.5% applies to the remaining $250,000.
Why it matters
Combined with a line fee, it means an unused facility is never free — size the limit to what you actually need.