Overdraft is a contract between the bank and the account holder, where a certain amount of money is made available in the checking account for use and returned with additions and other charges financial. A person who has a checking account in a bank and fits the financial model of overdraft can make use of the product, provided it is released.
The overdraft works as follows, linked to your balance is an extra amount, for example, let's assume that the balance of the Ana's checking account is BRL 2,000.00 and the overdraft limit is BRL 900.00, so Ana's available balance is BRL 2.900,00. Care must be taken when handling a checking account with overdraft availability, as some entities Banks provide the balance of the checking account added to the value of the overdraft on the statements, constituting a single balance.
Unlike loans that are charged in installments, the overdraft amount is charged in a single installment on the due date (amount used plus additions). As this money is made available automatically and without bureaucracy, people use it because of its ease, but it is good to be aware of the fees interest rates, some banks abuse the collection, even working with rates of 9% per month (data from Central Bank, June 2009) more additions.
To get an idea of abusive collection, just compare the overdraft interest rate with the savings correction rate. We have seen that overdrafts can charge around 9% for the loan, while it pays users of savings accounts interest around 0.6% (data from the Central Bank, June 2009). This difference between the purchase price (savings) and the sales price (overdraft) is called the spread.
If you use BRL 100.00 of your account limit at a financial institution that charges 9% interest on the overdraft, you will pay on the closing the month the minimum amount of BRL 109.00, remembering that the charge is proportional to the calendar days of the start date of the use. In the case of savings accounts, the same BRL 100, receiving a 0.6% correction, will result in BRL 100.60.
Economic experts warn that overdraft is the most expensive money on the financial market, and advise people to use it only in situations of extreme urgency. So be careful when using your overdraft, find out the interest rate and charges that will apply to the amount used.
by Mark Noah
Graduated in Mathematics
Source: Brazil School - https://brasilescola.uol.com.br/matematica/os-juros-cheque-especial.htm