Is it possible to cancel an overdraft with debt?
Using the overdraft limit is almost always disadvantageous. The interest charged by banks on the use of overdraft is quite high: from 11% to 15%. At this time, then, if you cannot cover the limit for interest charges to stop, the best option is to request the cancellation of the limit.
But many consumers are unsure if they can cancel a debt overdraft. Well, the answer, by law, is yes. No consumer is required to have a banking product that charges their current account if they do not want to.
But even by canceling the overdraft limit, the debt will continue to exist. The difference is that the balance you used from the overdraft will no longer be automatically debited from the checking account – but will be paid by bank slip.
Consumer has the right to cancel overdraft even with debt. Know how!
What if my bank doesn’t want to cancel my limit?
In this case, the customer must issue a letter with acknowledgment of receipt, called the AR. In such correspondence, the consumer should be clear stating that he or she wishes to cancel the overdraft limit and pay it other than directly from the checking account.
The deadline for the bank to contact the customer is 10 business days from the date of posting of the letter.
The bank did not respond to my request
If the banking institution does not contact you after the deadline for sending the RA, the consumer may file a lawsuit to cancel the overdraft limit. For this it is essential to keep the proof of submission of RA.
The procedure can be done through the Special Court (formerly Small Causes).
Filing a lawsuit
The consumer who wishes to file a lawsuit in the Special Court must attend the nearest service station of his residence. You should also be provided with your special documents and documents proving that your request for cancellation of the overdraft has been denied or ignored by the bank.
The person will then be answered and must wait for the notice to attend the hearing.
At the hearing, the consumer should state the situation and inform how he can pay the limit of the overdraft he has used.
Agreement is almost right
In these cases the bank usually accepts the conditions requested by the customer, canceling their overdraft limit and receiving the amount of debt through payments by bank slips.
Tips for not getting on overdraft
Now that you have answered your questions, here are some tips to avoid this whole process:
- Ask the manager to reduce his overdraft limit, so the chance of getting a lot of debt is lower;
- Once you use the overdraft, try to cover it as soon as possible so as not to pay too much interest.
- If you go overdraft all month and use almost your limit, take out a personal loan and cancel the limit. So you pay off the limit and you only have the personal loan to pay off – which usually has much lower interest rates than the overdraft limit.