2023-09-09 06:04:06
You trust that you have enough money to finish the month without your account going into the red, but an unexpected receipt or the collection of a late purchase plays a trick on you. Virtually every bank account user has encountered this unpleasant situation. When a bank overdraft occurs, the entity grants at its will, without requiring our authorization, a credit to pay the expense that has reached the account even though it does not have enough money to cover it. This is the definition of red numbers. The bank understands that, by generating these red numbers, “it prevents us from damages derived from non-payment such as, for example, a power outage or an accident for which the insurance is not responsible,” explains the Bank of Spain. However, we must keep in mind that this protection is not free.
The problem with having an overdraft in the account is that not only will you have to repay the money that the bank has lent you, but just like with a mortgage or any other credit, you will have to pay commissions and interest. “Hence, for example, a five-euro overdraft for a week can end up costing around 50 euros,” explains Eroski’s Consumer publication.
Consumer collects the approximate amounts that an overdraft counts. The commission is usually 4.5% on the largest debit balance with a minimum of 15 euros, although each bank has its own rates. And the interest, for its part, is usually between 7% and 7.5%. For example, there are entities that do not charge the overdraft commission.
What is certain is that the cost of overdrafts has a maximum limit. In the case of individuals, “the cost of the overdraft has a legal limit, so that the joint application of the commission and the interest on overdraft cannot give rise to an equivalent annual rate greater than 2.5 times the legal interest of the money”, explains the Bank of Spain. In 2023, the legal interest is 3.25%, so the legal overdraft limit would be 8.13% APR.
Expenses to recover the money
Another expense can be added to these expenses: the commission for claiming debtor positions. “This commission is charged by the bank to cover the costs of claiming the debt. It is usually between 30 and 40 euros and harms, above all, customers who have an overdraft of a few euros, since it makes the cost of credit much more expensive”, explains the Eroski Consumer publication.
Some banks apply this commission gradually, and do not charge the same if the notice they send to the client is a simple SMS or a certified letter or a burofax. Some entities also apply the commission in sections, so that if the overdraft is for a small amount, for example less than 10 euros, they do not charge it and the rate increases as the overdraft amount increases.
In any case, it is essential that this commission be reflected in the account contract. Furthermore, the Bank of Spain considers that there must be a proportionality between the amount of the commission and the cost of the means used by the entity to claim the debt.
If you do not want to have to assume these extra charges, the Bank of Spain recommends that you go to your entity and sign a document so that they do not grant it to you. “But, don’t worry, in any case remember that, for each overdraft, your bank has the obligation to send you a document with all the details of the amounts it has charged you,” he adds.
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