November 27, 2022

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Cut your checking account below zero?  Not a good idea.  “We regularly follow up on customers who are in the red zone” |  MyGuide

Cut your checking account below zero? Not a good idea. “We regularly follow up on customers who are in the red zone” | MyGuide

Spaargids.beOf the total of 20 million current accounts in Belgian banks, 1.2 million were below zero at the end of last year. That’s what Veblevin, the Belgian association of the financial sector, calculated. This pertains to 6.1 percent of checking accounts. What is the amount of penal interest paid by those account holders? And how can you prevent your checking account from sliding into the red? Advise.

How much you can get into the red zone and how deep it goes depends on your checking account and your bank. The amount of the debit balance cost also varies from bank to bank. In doing so, we must first distinguish between authorized and unauthorized overdrafts.

An authorized overdraft means that it has been agreed with the bank that you may go below zero to a certain amount. Thus, the customer is informed in advance of the annual and monthly cost percentage attached to the debit balance.

With an unauthorized overdraft, you have a checking account that in principle cannot go below zero. But in practice, this happens, particularly through automatic payments, such as credit or debit card settlement. In the case of unauthorized overdraft, the penalty interest is higher than the authorized overdraft. At BNP Paribas Fortis, for example, this is 12.10%, compared to 9.50% (up to minus 1250 €) or 8.50% (up to minus 2500 €) with the overdraft facility.

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(Almost) Nobody is below zero

“We have clients who have limited access to sub-zero in their accounts. These are accounts that have been active with us for many years,” says Mickey Wayne from Argentina. “For a few years now, it is no longer possible to go below zero in open checking accounts. Recently.” Argenta now wants to equalize the situation for all customers and not allow a debit balance on any checking account from July 1, 2022. “This does not rule out the possibility that customers who do not have enough balance in the checking account at the time of their credit card settlement will go. At that time, we are talking about an unauthorized debit balance, and the debit interest applies to the period when the customer has a negative balance in the account.”

BNP Paribas Fortis has 19.39% current accounts with a debit line (it can be less than zero), 80.61% without a discount line and 2.31% without a discount line, but it is nevertheless less than zero (for example, due to the imposition of certain costs) . Hildi Junius of BNP Paribas Fortis: “We regularly follow up with customers in red. In consultation, we will reduce the allowed debit balance or adjust the maximum amount of spending using a credit card. For transactions rejected by third parties due to insufficient funds, the customer pays 7.26 euros per Declined transaction. We inform our clients through various channels to notify them of a pending transaction due to insufficient funds.”

Prefer to keep bank fees as low as possible? These checking accounts are free

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The bank sends a warning

KBC quotes roughly the same ratios as BNP Paribas Fortis: 84% current accounts without overdrafts and 16% with overdrafts. “The standard for someone who closes a new checking account is that there is no authorized overdraft,” says Peter Koseh of KBC. Some banks send a warning to the customer when the account goes below zero. “Customer can see their account balance instantly, without registering in the app,” says Belvius. Most financial institutions offer various digital channels, so that customers can check the status of their accounts at any time and clear them if necessary. “In the realm of budget management, we already offer our clients a variety of options today,” says Peter Dercon of ING. “We are constantly adding features to our app to help customers better manage their budget.”

Opening a current account with or without a debit balance? Compare costs and terms in different banks here

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