What it's the Overdraft

Overdraft is a very specialized type of loan, as it is also issued bank money in order to pay the debt or product. But the size of an overdraft facility agreed in advance, in the contract to the bank card settlement (usually payroll). For the client - this is the easiest type of loan for a very short period of time.

Credit limit of this type is usually calculated as a percentage of the average coming at the expense of the customer. That is, the higher the monthly income to the bank card, the higher overdraft limit. This is the amount of money that the bank provides the cardholder over his personal funds. In speaking clients call Overdraft - "go to the minus" salary.



So, when your salary card end personal funds, you can still use the card, paying for goods and services, withdrawing cash, as there is money overdraft. But the amount of credit issued so when you receive money to repay the expense automatically. Of course, you can own and repay, making the required amount in the account. The first use of overdraft means that now it can be used before the expiration.

What it's the Overdraft   Advantages of overdraft:

it can be without consequences to refuse;
do not need to collect any documents, enough money turnover on the map;
there is no fee for the use of bank funds;
you can pay off in the long term (maturities can be 1 - 36 months);
overdraft on a single card can be linked to other customer accounts and cards, both for the use of money and to pay off;
after repayment of resumes;
for certain types of clients develop bonus, savings programs in conjunction with other organizations (for booking and purchase of airline tickets and other.), money which is partially or fully refunded to your account.
if there is a grace period on the card, overdraft becomes virtually free credit.
What it's the Overdraft  - Disadvantages overdraft:

ask for an overdraft is impossible - a bank decides who provide it;
Bank may limit the monthly or daily amount of money available on the loan;
interest on overdraft is often significantly higher than for any other type of credit;
better repay the entire amount at once, but not often.
Most often, banks do not restrict an overdraft, but its size is calculated individually for each client. The size limit is a very important criterion, because it is the maximum allowable amount that can provide the client and he will be able to repay it as soon as possible. In general, the size limit depends on the creditworthiness of the customer - the cardholder.

The size limit is typically less than 50% of income for 3 months (minimum taken receipt of funds). For the Russian market is a 5 average daily revenue (calculated may be taken as soon as the workers, and just calendar days).

Exactly how to calculate the allowable overdraft limit each bank defines itself. The most commonly used method is the following: are considered the maximum revenue for each of the last three months, whichever is less turnover of these months are calculated and 50% of the average monthly minimum turnover excluding credit.

Among other common methods of calculating the limit:

Technical overdraft - at the expense of the customer have permanent cash inflows (foreign exchange, deposit, etc.), its financial position is not taken into account;
a cash collection - more than half of the credit turns on the client's account bank accepts as revenue from collection.
Most often, the overdraft limit is 20-50% of the average income for the month.

Size overdraft constantly analyzed carefully considered as a speed range, and the amount and subject to this limit may increase as well as decrease. Russia is characterized by virtually overdrafts of 500 thousand. - 1 ml.rubley.