During the current transformer (CT) saturation, the secondary current waveform of a CT is notably different from the primary current's waveform. When the discrete Fourier transform (DFT) is applied to such a distorted secondary current of a CT, the obtained root mean square (RMS) value is significantly lower than it actually is, which can lead to the malfunctioning of the relay protection devices. The operation of some relay protection algorithms (such as certain algorithms for electric arc detection on overhead lines) is conditioned by higher fault current harmonics. Obviously, due to the secondary current's distortion, the higher current harmonics cannot be accurately estimated. On the other hand, even when there is no CT saturation, the RMS value can be incorrectly estimated under DFT due to the fault current's direct component. This study presents a new algorithm which enables an accurate RMS value estimation regardless of the CT saturation and/or presence of the direct fault current component. What is more, the algorithm also enables the estimation of higher fault current harmonics under CT saturation. Various tests have indicated a high precision and robustness of the proposed algorithm and the possibility of combining this algorithm with the algorithm for electric arc detection on overhead lines.