The Special Check is a credit that can be used in an emergency way and ends up helping many Brazilians. But it is necessary to be parsimonious and understand how this value works and what are the interest attributed to it.
All services offered by financial institutions have pros and cons. It is no different with Overdraft.
Although it is very useful, we can also point out some points that make its abusive use risky.
In this article, we have gathered the main information about Overdraft and we will present it so that you can draw your own conclusions.
What is Overdraft
In Brazil, the Overdraft is a credit that the bank makes available in case the customer needs to make bank transactions and does not have a balance available at the time of the transaction.
It is considered an automatic loan, pre-approved by the bank, which will only have its fees and interest charged to the account holder if used.
With the Overdraft, the account holder can make any bank transaction, including bill payments, transfers, applications, withdrawals and purchases.
The availability and pre-approved values of the product depend on the rules of each financial institution. If you are interested in finding out more, look for your current account manager
The Overdraft is one of the banking products most used by Brazilians, but it is necessary to know how to use it.
Although it is the most sought-after service to solve urgent financial problems for account holders, it is also largely responsible for users’ indebtedness.
According to the Credit Protection Service (SPC), more than 30 million consumers entered the list of defaulters due to the product. Does this mean that you should not use the service? Not exactly.
Experts say that overdraft is an emergency limit and should be used as a last resort and with caution.
Since rates and interest rates are very high, in the end, you could end up in big debt, turning your initial problem into something much bigger!
How to Calculate Overdraft Interest
The rates vary according to the financial institution, but can exceed 300% per year.
According to data released by the Central Bank in 2020, Overdraft interest rates reached 318.7%, against 175.2% in credit card installments and 119.5% in personal credit.
The charge is made per day, under compound interest. On the first day, the rate is applied to the total used.
The next day, it falls on the initial amount plus interest from the previous day and so on. In addition, other fees are charged, such as the Tax on Financial Transactions (IOF).
It is very important to remember that failure to pay any debt will negate your name and prevent you from being able to do a number of other credit processes. Stay tuned!
New Overdraft Rules
In 2018, new rules were implemented to make people use Overdraft more consciously.
Among the main changes is the notice from your banking institution, stating that you have entered the Overdraft.
The statement has undergone an aesthetic change, so that the customer clearly understands the balance available in his account and the amount available in the Overdraft.
The banks received numerous criticisms for confusing account holders when assessing the account balance. With the change, this confusion should no longer occur.
Financial institutions must pay attention to the value and time the customer uses the service.
So, always consider whether use is really necessary when you receive the notice that you are entering the Overdraft.
If the product is used for more than 30 days, the bank must contact the account holder to offer lines of credit with lower interest rates, preventing the customer from entering into a debt that he will not be able to pay in the future.
Overdraft is a service offered by financial institutions to make your life easier. In fact, it is a pre-approved credit that can be used on the spot, without any impediment, for any emergency.
Just be aware of the amount used, the time and, mainly, the interest that will be paid.
Practicality and ease of use mean that many people use the service without really needing it.
Care must be taken when using it. It is not interesting to use the Overdraft limit for many days. The sooner you cover the amount, the lower the interest rates will be.
Banking products serve to make life easier for the user, but attention is needed. Do not use services without first checking with your manager what fees and interest may be charged.
The ideal is to bet on Overdraft as a way to get a breath and quickly organize your financial life. Do this to avoid indebtedness and major problems that could negate your name.