Spaargids.beOf the total of 20 million current accounts at Belgian banks, 1.2 million were below zero at the end of last year. That is what Febelfin, the Belgian federation of the financial sector, calculated. This concerns 6.1 percent of current accounts. How much penalty interest do the holders of those accounts pay? And how can you prevent your current account from going into the red? Spaargids.be advises.
Whether and how deep you can go into the red depends on your current account and your bank. How much a debit balance costs you also differs from bank to bank. In doing so, we must first distinguish between an authorized and an unauthorized overdraft.
An authorized overdraft means that it has been agreed with the bank that you may go below zero up to a certain amount. The customer is thereby informed in advance about the annual and monthly cost percentage that is attached to the debit balance.
With an unauthorized overdraft you have a current account that in principle cannot go below zero. But in practice this does happen, in particular through automatic payments, such as the settlement of the credit card or a direct debit. In the case of an unauthorized overdraft, the penalty interest is higher than with an authorized overdraft. At BNP Paribas Fortis, for example, this is 12.10%, compared to 9.50% (up to EUR 1,250 below zero) or 8.50% (up to EUR 2500 below zero) with an overdraft facility.
Current account fees vary widely: View here which current accounts became more expensive this year
(Almost) no one below zero
“We have customers who have limited ability to go below zero on their account. These are accounts that have been active with us for many years,” says Mieke Winne of Argenta. “For a few years now, it has no longer been possible to go below zero on newly opened checking accounts.” Argenta now wants to equalize the situation for all customers and not allow a debit balance on any current account from 1 July 2022. “This does not exclude the possibility that customers who have insufficient balance in the current account at the time of their credit card settlement will to go. At that time, we speak of an unauthorized debit balance and debit interest is applicable for the period that the customer has a negative balance on the account.”
BNP Paribas Fortis has 19.39% current accounts with a debit line (which can go below zero), 80.61% without a debit line and 2.31% without a debit line, but which are nevertheless below zero (for example because certain costs have been charged). Hilde Junius of BNP Paribas Fortis: “We follow up on customers who are regularly in the red. In consultation, we will reduce the permitted debit balance or adjust the maximum amount for spending with the credit card. For refused transactions to third parties due to insufficient funds, the customer pays 7.26 euros per refused transaction. We inform our customers through various channels to inform them of a transaction on hold due to insufficient funds.”
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Bank sends warning
KBC quotes approximately the same percentages as BNP Paribas Fortis: 84% current accounts without overdraft facility and 16% with overdraft facility. “The standard for someone who closes a new current account is without an authorized overdraft,” says Pieter Kussé of KBC. Some banks send the customer a warning when an account goes below zero. “The customer can immediately see the balance of his account, without registering in the app,” Belfius says. 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 field of budget management, we already offer our customers various options today,” says Peter Dercon of ING. “We are continuously adding features to our app to help customers better manage their budget.”
Open a current account with or without a debit balance? Compare the costs and conditions at different banks here
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