Overdraft is a valuable resource for financial emergencies no one doubts. After all, an affordable, pre-approved credit line seems like a very advantageous immediate solution when we are surprised by unexpected expenses – it is no wonder that 40% of Brazilians have already made use of this feature during the year.
What many people do not realize is that the price to be paid for this convenience can be extremely high: overdraft interest is the most expensive on the market!
If you have ever considered using this credit to get out of the grasp or if you still have questions about this type of credit, read on this post!
How does overdraft work?
Overdraft is a type of loan pre-approved by the bank or financial institution, available to its account holders and calculated according to the registration information and the history of financial movements of each client.
Thus, the credit limit is set and released without the need for requests or contracts, simply and without bureaucracy. But the customer should keep in mind that this amount is not part of their balance and, if used, should be returned with interest, calculated for each day of use.
How to avoid debt overdraft?
Although it is a valid means of balancing the budget in emergency situations, overdraft should not be used as a supplement to income. To make good use of this credit, check out some tips:
Control accounts with direct debit
Another way to enter the overdraft without even realizing it is to forget to include in the financial planning accounts that are registered in automatic debit.
Despite being a useful and efficient feature, automatic debiting requires extra attention so that the bank balance is sufficient to cover the debited amounts.
Organize your expenses
Spending more than you earn is the right recipe for getting into debt and falling into the overdraft trap. Experts are unanimous in stating that the overdraft limit should not be used to purchase goods or to supplement income.
This type of credit is only valid for emergency expenses, when there is no other advantageous and immediate option.
Use the benefits with caution
Another little known disadvantage is that IOF (Tax on Financial Transactions) focuses on credit regardless of term.
Escaping overdraft debts mainly depends on planning and control. In an unstable economic scenario, where about 54% of Brazilian households are in debt, it is important to properly manage the budget and use the overdraft facility only sporadically.
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