Most people have probably heard of Special Check , a practical and easy option for those who need money.
However, this type of loan is usually not a good alternative, mainly due to the high interest charged.
Are you not sure if it’s worth using the overdraft or want to know more about how it works?
Then check out the main information on this type of credit offered by the banks and get all your questions!
What is Special Check and what is it for?
A very common situation that Brazilians need to face is the lack of money at the end of the month .
This is due to numerous factors and unforeseen , from a very high credit card bill to receiving an unexpected fine.
The fact is that the money that the person has in the current account is not enough to pay off all his debts.
It is at this point that they often resort to the Special Check , a type of “automatic loan” offered by the banks and which, at first glance, seems to be a good option to get rid of the squeeze.
The Special Check, therefore, is a revolving line of pre-approved credit available to the customer in the bank where he has a checking account.
In other words, it is money that is available for her to use when the amount in her account is not enough to pay for what she needs.
The main feature of this type of credit, and what makes it so popular, is the convenience and ease of achieving it .
In this case, the accountant can withdraw the money directly from the ATM, unlike the personal loan, which requires the customer to go to the bank, face queues, negotiate the conditions and sign a contract.
How does the Special Check?
Although many people have used the Special Check at some point in their lives, the fact remains that most people do not understand how this type of credit actually works .
And that’s exactly what makes it so dangerous to your financial lives .
The overdraft works as follows: When you have no current account balance, the person can request the Special Check directly from your bank’s ATM .
The person can withdraw the amount available without major difficulties, or use the credit through check, debit card, payments or transfers .
When the salary or other money falls into your checking account, the institution will discount the corrected loan amount, that is, with previously established interest rates , monetary correction and IOF tax.
Example of Special Check : If you have $ 600 in checking account and your Special Check limit is $ 1,000, it means that you can spend a total amount of $ 1,600, which is the sum of the balance plus the credit available to you .
Looking like that, it really seems like a good idea to have money always available for you when you need it, is not it?
However, this type of credit can be very damaging since it holds very high interest rates that can jeopardize personal finances .
It is worth mentioning that the amount available to each client depends on the bank’s assessment and that the higher the Special Check limit, the more dangerous it becomes to resort to it .
What does it mean to get a Special Check?
When a customer spends a premium on what he has in his checking account, he goes on the Special Check.
Once this is done, he will have a negative balance in his checking account until the amount is returned to the bank.
What is the best way to get out of the Special Check? 5 tips
Getting overdrawn is certainly a very easy thing.
This, in fact, is one of the points that lead people to opt for credit.
The problem is when this debt becomes a snowball and the person is faced with an extremely high amount to pay. What to do at the moment?
If you are already in this situation, do not worry. To help you, here are 5 tips on getting out of the Special Check . Check out!
1. Make a Personal Loan to Reduce Interest
The first tip for you that wants to get out of the Special Check is to make a personal loan so that the interest on the debt is reduced.
This is usually a good alternative for people who are in some sort of financial difficulty, as well as being much more advantageous .
This is because this type of credit has a lower interest rate than that offered by the Special Check .
Thus, you guarantee that the amount owed will not be as high as with the type of overdraft credit.
If you want to take out a personal loan, check out Credit Lender and we’ll help you find the best interest rates and installments for your pocket .
2. Deal with the bank
If you have had to use the Special Check in the last few months and you are having difficulty paying off your debt, you should talk to your manager to negotiate with the bank.
In general, institutions tend to facilitate this type of negotiation , since they are the main stakeholders in debt repayment.
Do this and you will have an outlet to get rid of the Special Check, either with lower interest rates or even with the debt swap as in the previous tip.
3. Share the debt of the Special Check
If you do not want to take out a personal loan with your bank, an alternative to repay the debt is to pay off the amount due to the institution . By paying a fixed monthly amount to the bank for a certain period, the risk of remaining in debt is less.
But remember that the most important thing is not to resort to the Special Check again, especially as long as you do not clear the debt with the bank.
4. Reduce the limit on your Special Check
Many banks offer a number of facilities for the customer to use overdraft, including a high limit.
Apparently this may be a good option, especially in times of tightening, but in fact only causes the debt to become even bigger .
So, to avoid falling into this trap, the tip is to ask the bank to reduce the limit of your overdraft.
Thus, you do not run the risk of using that available money as an extension of your income, leaving you only to situations of real need.
If you feel it is risky to have this money available, you can ask the bank to cancel your Special Check.
That way, you get rid of the risk of having the account negatively for that type of credit once and for all.
5. Manage your personal finances
Last but not least, the best way to get rid of overdraft is to have greater control over your personal finances.
This situation is quite common among Brazilians , who generally do not have the proper financial education to properly handle their expenses.
Therefore, it is critical to evaluate your income and expenses in order to identify whether cuts can be made.
It is also worth saving a sum whenever possible. This will make all the difference in times of tightness, since you will no longer have to resort to such credit.
Also, it is important that you do not confuse balance and limit.
The balance is the money you actually have in your checking account, while the limit is the line of credit offered by the bank, that is, it is an amount that does not belong to you.
When to use the Special Check?
Overdraft can be a great help in times of tightening, which does not mean that you should use it often.
The idea is to resort to this money only in times of extreme need , such as illnesses, fines, delayed tickets and other similar situations.
While presenting itself as an easy option for those who need money, such credit is often a great trap.
Therefore, when calculating your expenses, do not count on this amount .
After all, it does not belong to you, even if it appears in your checking account; it is only a credit offered by the bank.
If you are going through a situation where you need money and you know you can not return the money quickly, you should run away from the Special Check .
In this case, the best thing to do is negotiate a cheaper credit with the bank .
Remember : Even if it’s practical, overdraft can become a major problem in the future.
What is the limit of the Special Check?
When applying for the Special Check, one of the things that you should take into consideration is the limit stipulated by your bank.
But, first of all, you need to understand what the Checkmark Limit means .
Overdraft limit is the line of credit that the bank offers you on this type of loan.
In other words, it is the amount available to you, defined according to your monthly income and the relationship you maintain with the financial institution.
Some banks even offer customers a special check limit without charging interest for a few days.
This does not necessarily mean an advantage, since these banking institutions may charge higher rates than the others at the end of the exemption time.
Be alert if your bank offers this condition, since, at the end of the period stipulated by the financial institution to pay the Special Check, interest usually comes with everything.
How to withdraw money from the Special Check at the ATM?
If you have decided that it is a good option to avail the Special Check, it is time to know how to withdraw the money in your bank.
It’s quick and simple : you only have to go to an ATM and select the option corresponding to that type of credit.
Once this is done, the bank will release the requested amount as long as it is within the Special Check Limit .
You can also use the amount by way of transfers, payments, debit card and check.
Special Check and IOF
Transactions carried out with the Special Check also suffer from the IOF, the Tax on Financial Transactions .
This tax, collected by the Brazilian government, is charged every time the customer uses the credit, even in cases in which he is entitled to a period without interest.
The amount charged is around 0.38% + 0.0082% per day on the contracted value .
Remembering that tax collection is monthly, but your rate is daily. Therefore, it pays to be aware of this amount that can further increase your debt.
What is the difference between Check and Check?
Despite the similar name, the Special Check is totally different from the traditional checkbook we know of.
That is, you can use this line of credit even if you have never signed a check in your entire life.
It is not known why the Special Check received this name, but the hypothesis is that it would have arisen to avoid the famous “bottomless checks”, since the customer has a credit available even without a current account balance.
How to consult Special Check?
If you already have a checking account and want to check the Special Check available by your bank, simply send a bank statement.
Just below the balance, you can check the limit of the overdraft .
It is also possible to query the application from your bank.
Just look for the option in the menu and check the limit established by the institution.
Again it is important not to confuse balance with limit.
Although both amounts appear in the bank statement, this does not mean that you have the full amount in account , but that there is a value available for immediate use, adding up the balance and the limit of the Special Check.
Interest on the Special Check
As has been said before, the great danger of overdrawing is often the amount of interest charged, which is very expensive and can reach 15% per month .
This is because the bank does not ask for any type of guarantee beyond the credit limit approved for the client, ie he is risking more to lend money that way.
It is different from what happens with personal loan, for example.
To get personal credit, the client must go to the agency, negotiate the conditions with his manager and sign a contract.
By way of comparison, while payroll loan interest rates reach an average of 42% a year, overdraft interest may be 327% for the same period, according to the Central Bank.
It is the same as saying that if you have a debt of $ 500, at the end of a year it will exceed $ 2,400. It is no wonder that the overdraft only loses to the credit card when we are talking about the loan with the most expensive interest rate on the market.