This paper describes a busbar current differential relay in conjunction with a current transformer(CT) compensating algorithm irrespective of the level of the remanent flux. The compensating algorithm detects the start of first saturation if the third-difference function of the current exceeds the threshold; it estimates the core flux at the first saturation start by inserting the negative value of the third-difference function of the current into the magnetization curve; thereafter, it calculates the core flux during the fault and compensates the distorted current using the magnetization curve. The algorithm estimates the correct secondary current irrespective of the level of the remanent flux and needs no saturation point of the magnetization curve. The proposed relay can improve not only security of the relay on an external fault with CT saturation but sensitivity of the relay on an internal fault; the relay can improve the operating speed on n internal fault with CT saturation. This paper concludes by implementing the relay into a digital signal processor based prototype relay.