All individuals and legal entities that have a bank account, can optionally apply for a loan in the form of an overdraft. The word “credit” is understandable even to a student today, but not everyone knows what an overdraft account means and why it cannot be called a loan.
Why open overdraft
If you need to close a hole in the payment turnover, then you can get a bank loan with huge interest rates, but an overdraft. Suppose you have a bank account, you use it not only for profit, but also for the deduction of certain amounts to the customer. At some point, the required amount was not in the account, and the money should be transferred as quickly as possible. The receipt of funds to your account should occur in a day, but the customer can not wait. To urgently transfer money to the customer, an overdraft card is used. This type of loan should not be confused with a loan or other financial transaction. At registration, a certain type of card is issued - overdraft.
Examples and specific numbers
To make the term “ overdraft card” more understandable, this is a concrete example with numbers on which you can figure out how this type of loan works.
In the morning, the entrepreneur has 10,000 rubles on his balance sheet. That day he goes to the bank and signs an agreement on opening an overdraft limit in the amount of 1 000 000 rubles. Using paper, the entrepreneur gives the bank an order in the amount of 100,000 rubles. The necessary money is transferred by the bank to the counterparty, including through overdraft. It turns out that the overdraft entrepreneur owes the bank 90,000 rubles, but he still has 910,000 rubles in the limit, which he can use if necessary.
Suppose, the next day, an amount of 120,000 is transferred to the entrepreneur’s account (for example, the counterparty transferred the money). An overdraft loan debt is repaid, and the free limit of funds that an entrepreneur can use is restored again. It turns out that the next day he again has at his disposal an amount of 1,000,000 rubles. Here is a painted example for you that reveals the essence of the question of what an overdraft bank card is.
For what purposes can I spend the limit of money issued by the bank
Almost any bank exercises control over the funds that it gave in loans to a legal entity or individual. If the borrower has his own business, then the overdraft is used to pay bills, pay salaries, taxes, make prepayments for work, repay loans, and so on. The bank will not allow you to use the money limit if you forgot to pay taxes or loans and a penalty has already been paid on them. If the borrower has such a case, the bank will not even allow him to acquire non-current assets through overdraft.
Force Majeure, or Overdraft Card Debt
It is impossible to predict what will happen tomorrow, how your business will go. If you have not calculated your capabilities and the required amount of money did not fall into your bank account, then this is not the worst, provided that the bank loan limit has not been affected. Overdraft card - what about debt to the bank?
If you nevertheless used this type of loan, and the receipt of money to the bank did not happen before the date specified by the agreement, then the payment can be made in cash at the bank cash desk. If the borrower has a second account to which money is constantly coming, then you can transfer it to the one where there is overdraft debt. All operations take place within one business day.
When signing the contract, you must clearly indicate the date by which you need to deposit funds. As a rule, this is the 30th day after the opening of the credit limit. Some banks ask you to cover the debt by the 20th day of each month, regardless of the date the limit was opened.
Under what conditions can I open an overdraft card
To obtain a bank loan, the borrower often needs to have a bunch of certificates and documents with him that confirm his solvency. If a large amount of money is required, then guarantors may also require. Overdraft card of Sberbank Visa Classic provided without collateral property. It is enough for the bank to see your monthly cash receipts into the account. Based on the number of cash revolutions, a decision is made in how much you issue an overdraft. It is possible that the creditor will require guarantors, this may be the director of the enterprise, owner, co-owner and other persons associated with your type of activity.
Who may be denied a cash issue
Overdraft card - what is it, is it given to everyone? It would seem that if there is an account that regularly receives a certain amount of money, then why should the bank refuse to issue an overdraft? It turns out that using an account is not enough; you still need to have a positive credit history. Before making a decision, the bank will check not one applicant, but the entire enterprise. If it seems to him that it will be liquidated in a couple of months or will not generate income, then the loan will most likely be refused. In addition, at least three months of turnover should take place on the applicant’s bank account.
Although each bank approaches the last requirement, proceeding from its point of view. There are such cases: an important client applied for an overdraft, who recently opened an account with this bank, but has for many years had accounts with other financial organizations. The bank can make a request to those organizations that carry out the customer’s money circulation and, based on this information, make a decision on the credit limit. When considering an application, they are interested not only in the monthly amount of funds that are credited to the account, but also in the frequency with which money is circulated.
Duration of the overdraft agreement
If the result is positive, an agreement is drawn up with the borrower for 180 days or more. Every 30 days, the amount in the account must be replenished to cover the overdraft debt. With full repayment of debt to the bank, the borrower has the right to terminate the contract. It is also allowed after 180 days to draw up a new agreement. Interest on such an agreement has always been less than on a bank loan. The conditions for providing an overdraft are much more loyal, since interest on the use of money is accrued only on the balance of debt at the end of the working day.
If a debt arises, the bank has the right to demand its money in the shortest possible time, and if you have such a situation, then you are guaranteed a black list and a bad credit history. Overdraft is given in one currency, to one borrower and in one bank.
Best loan
Overdraft card - what is it for the borrower: profit or debt hole? Often a person cannot plan his expenses, and when receiving a salary he starts buying a bunch of unnecessary things. At the last moment, he recalls that the most important thing was never acquired, and not all payments were made on time. You can turn to relatives and friends for help, but not everyone has friends who can freely lend the necessary amount of money for several weeks.
Not everyone likes to lend money. Many are guided by the following principle: if you want a person to leave your life, lend him money. Why test the theory in practice, it is better to simply refuse debt, citing difficult financial times. Why take a detour if you can borrow from the bank for the same couple of weeks, and even at low interest rates.
Overdraft as a type of lending
What does an overdraft bank card mean? This phrase from English translates as "super account". Throughout the world, this service is gaining popularity every year not only among businessmen, but also among the ordinary working class. You can independently calculate what limit the bank can open for you if the application is approved. The overdraft amount will not exceed the average salary of the applicant for three months. If the contributions are of a regular nature, then the client can withdraw money from the account until the moment the agreement is terminated.
What does an overdraft card mean for an individual? To any working person, the salary is transferred to the card. If the bank decided to open a credit line, this implies that the overdraft will be covered by salary. In case of dismissal of the employee, the overdraft will have to be fully repaid within a few days.