The banking discovery is how we formally know to be “in the red”. This more colloquial expression was adapted because the banks showed in red the balance in case it was negative. Bank overdraft means that the balance of a checking or savings account is below 0. As a consequence, the account holder owes the financial institution the negative balance reflected.
As a rule, current and savings accounts are creditors, that is, banks or savings banks have a payment obligation with respect to the client. Sometimes it can happen that we get a receipt higher than the amount we have in the account. If the bank does not return the receipt, our account will be in the red. One of the consequences of banking discovery is commissions and interest. If we stay in the red, banks can charge us commissions and very high-interest rates. That is why the mistake can be really expensive. It usually takes about 4 days since the discovery occurs until you are penalized. In addition, the bank may also choose to include our name in a list of defaulters.
How to avoid a bank discovery?
Banks that handle bank overdrafts
The first thing, when we open a new account, is to consider the possibility of finding ourselves in the red. If one is aware of what can happen, will seek to agree with the bank a feasible solution. There are many banks that in their current account and savings contracts regulate the possibility of granting overdrafts. So the first advice is to open the account in a bank that serves discovered.
Have more than one account in the same bank
Another aspect that helps is to have more than one account in the same bank. This is because if one of them is in the red, the same bank can collect the debt with the balance of the other account without charge. Of course, we must ensure that the bank offers that option since they are not required to do so.
Stay up to date with our movements
Keeping track of the balance of our current account will allow us to prevent a possible bank discovery. It is important to check our account at the end of the month, to see if there is or not the possibility of staying in the red. It is also important to know what are the periodic automatic expenses of each month. If we know them and we have them in mind we can avoid that they can surprise us. You can do all this with your bank’s app, which offers more services every day. They are applications linked to your account and allow you to control all your expenses from your mobile phone. We can also ask the bank to notify us before collecting a receipt that would leave us in the red. With this, they offer us some time to be able to solve the situation.
Another option that we have is to request an advance of our payroll. It is normal to request it from our company, but it is not the only option. Currently, there are a few banks that also offer a payroll advance. With this, you have the money days before the company pays you.
Apply for a quick credit
If You Need To Pay Back Over Longer Terms? In order to avoid a bank overdraft, another alternative we have is fast online payday loans. If we know that if we do not do anything, we will finish the month with red numbers, it is best to request a quick credit. One of these quick loans can avoid high-interest rates for non-payment. It consists in requesting a credit so that the account does not remain in negative. With this, after 30 days (or less, depending on the needs of the applicant), you will return the money from the credit, once you have cashed, paying lower commissions than those involved in a bank overdraft.