Current account in red, change of rules in 2022. Holders will have to pay attention to the new details introduced by credit institutions.
New year, new life for the account holders. Banks are re-evaluating the standard that govern current accounts when they fall below a certain limit. The negative balance is a risk for the credit institution since it advances money to the customer. At the same time it creates a situation of loan whose interests are shown day after day very high. It is therefore essential for the account holder to be able to handle wisely the current account avoiding that it ends up in red. Failing to resolve the situation in time, one would become defaulting quickly ending up having to pay back many to the bank more money of how many would be lent.
Current account in red, the new rules
In 2022 it will be a lot easier to become a debtor of the bank by falling below a certain amount. This is precisely because the rules on the current account in red will become more stringent and severe. Specifically, the account holder becomes in arrears after 90 days of time from the payment of a bond. An arrears beyond three months, in fact, would make the debt significant when certain limit thresholds are exceeded. The first amount established by the regulation is 100 euro for retail and exhibition displays 500 euro for other exhibitions.
The second threshold is even 1% of the total exposure against a counterparty. The quantitative choice of overrun beyond the sum available on the customer’s account is at the discretion of the bank. The so-called discovered authorized it is linked to the account contract and to the references regarding the duration and interest rates applied. It is the customer’s right, however, to increase or decrease the limits at any time.
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Discovery authorized, as it happens
The authorized overdraft is a revolving credit. The bank lends money to the account holder who will have to repay it by paying interest. The subscription to this instrument it’s free in almost all credit institutions. If the bank is authorized to provide the service, it will not even have to notify the customer but will proceed immediately to its application as soon as the account is in red. The only condition is to stay within the established limit. It will be up to the bank to make payments on behalf of the customer while remaining within the established threshold.
The situation becomes more complicated if there is no authorization – and thus it is implemented discovered abusive – or when the predetermined limit is exceeded. The lender has no responsibility in relation to overdue payments. The customer will face the rejection of a check, for example, or a direct debit. Fortunately, fewer and fewer banks apply the abusive overdraft as they offer attractive packages to customers relating to the authorized overdraft.
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