The overdraft is nothing more than a pre-approved limit money that the bank leaves available to your account for immediate use. The overdraft limit value almost always appears in your entire account balance and causes a false sense that the bank’s money is yours too! The problem is that the money that has been used is charged at the time that money falls on the account, such as wages and other debits, with interest charges.
How to calculate interest on overdraft?
The interest rate of the overdraft , defined by the banks, is monthly. Nevertheless, interest is applied daily on the outstanding balance .
There are banks that start charging by special check only after 10 days. But if you go beyond this time, it’s no use. Suppose the overdraft is paid on the 11th day. In this case, the interest will be charged for 11 days.
Tax on Financial Transactions (IOF)
In addition to interest, there is also a collection of IOF , tax charged when the current account balance is negative at the end of the day and the check is triggered. Please note: IOF is charged by the government even when banks do not charge interest for a few days.
Although you have monthly collection, your billing is daily. The IOF rate is 0.38% on the highest debit balance of the month + 0.0082% on the outstanding balance on each day. Following the example above, in addition to the R $ 86.00 interest, will be charged R $ 5.44 IOF, if we consider that the debit balance of R $ 1,000 was the same in the 20 days that the account was negative.
How to cancel the overdraft?
Overdraft is not a mandatory service, so it can be canceled at any time, even with outstanding debts.
To cancel the special check with debts, look for your bank, requesting the cancellation of the special check . Recall that, although frozen, the debt will continue to exist and should be paid.