When it comes to overdraft, many people are confused about how it works and often use that credit without a clue. So let’s uncomplicate this issue and give instructions on why to avoid using overdraft. http://renewallgardenproject.net has more notes
What is overdraft?
It is a pre-approved line of credit that is offered by the bank to its customers, usually when the current account balance comes to an end.
When the balance ends automatically the accountant goes on the overdraft, by acting as an unsecured loan, the danger of overdraft is the high interest rates, which only loses to the credit card rotary.
Most banks offer the interest rate exemption for their clients, but only for a certain period, which is usually 10 days, or the payment of interest only if the available limit is exceeded. Although this benefit exists, it is necessary to pay attention to the payment of the IOF (Tax on Financial Transactions), in which the client must pay independent of the bank’s credit policy.
What care to take with overdraft?
A lot of caution when examining your bank statement, because some banks bring in the amount of your balance added to the overdraft limit, giving the false sense that the total amount belongs to you, so, know how to identify which amount of your statement is the its balance and which corresponds to the limit of the overdraft.
Another point to be careful is to know that overdraft is not an extension of income, so it should only be used in emergencies. And, if the bank offers you a benefit of a few days without paying interest, know that even then, after the deadline will be charged the interest for all time of use of the credit, ie if you use the loan for 10 days without paying interest, in the 11th you will have to pay the interest relative to where days of use.
The bank itself will set a date to discount interest, and if there is no money in your account, on the day of payment, a fine of 2% will be charged in addition to the interest of the transaction. So, it is recommended to know if the bank offers you the option to choose a date to discount interest.
And of course, keep an eye on your checking account to realize when it’s close to getting on the overdraft.
When to use the overdraft?
It is important to emphasize that it is not recommended to use the overdraft because, as already mentioned, this line of credit is one that has the highest interest rates.
If you really need money, consider making a paycheck or personal loan before entering the overdraft. Also, organize your payments so that they are in automatic debit, although manually pay more work, you will be more aware of your accounts and will avoid entering the overdraft without knowing it.
However, there are still some ways to use this credit wisely. See also:
Combining the credit card with the overdraft is a great practice not to get into debt. As?
Example: Assuming you work selling truffles and using a credit card due on the 11th of the month. You usually receive from your customers between the 1st and 10th days, however, some usually pay between the days 11 and 20.
In this case, you will need to use the overdraft to pay no interest and fine of your credit card. However, your bank offers you 10 days free of interest on the overdraft. So if the amount paid by your customers by day 10 does not cover the full amount of the credit card bill, you have up to 10 days to use the overdraft, pay the credit card on the 11th and receive the money from your customers to pay the overdraft, all this free of interest.
How to get out of a debt with the overdraft?
Negotiate with your bank to install interest payments and consider making a loan with attractive rates. For this, count on the Financial Group and request your personal loan online without headaches. It’s fast here, safe and without bureaucracy.