Cash advances, ie, credit deposit products, are among the most frequently used banking applications that are still in high demand. Thanks to the cash advance product, consumers can shop within their limits, withdraw cash, and pay rent and invoices even if there is no money in their accounts. After these payments, the account decreases to minus.
In this respect, consumers of overdraft products should pay their negative balance within the maturity determined according to the contract with the bank. Otherwise, it may be possible to affect the credit rating.
Does the Balance Decline to Break the Registry?
After consumers use their overdraft account, the balance decreases as much as the amount used. In this context, the balance needs to be re-positive or neutralized. An agreement with the bank should be taken as a basis to know when these payments will affect the registry.
As a result of the agreement with the bank, it should be known when the payment period is and how long the payment period is given. For example, users overdraft deposits are obliged to make their balance positive until the 2nd day of the following month, regardless of the date of the month, based on the decrease in their balance. In this context, the credit rating of the consumers who do not pay until the 2nd day of the next month and whose balances are still negative will decrease, but the registry will not deteriorate as long as the delay hike can be collected.
Whenever the limit of the overdraft account expires and the balance can no longer be reduced to minus, so if the overdue hike cannot be allocated from the negative limit, the bank will initiate the related issue and the credit registry will be negatively affected.
On the other hand, it should not be forgotten that overdraft accounts should be used to meet short-term cash needs and therefore, if the period of non-payment is extended, a serious interest and delay penalty payment will be required.
How much does the negative balance affect the credit rating?
As mentioned above, the decrease in the balance and the failure to pay within the payment period decrease the credit rating. The intervals in which the payment period covers includes serious differences from bank to bank. Therefore, the call center needs to be contacted to find out which intervals of the payment period determined by the bank for your overdraft account.
If the credit debt is not paid within the payment period, the credit rating will decrease significantly due to the increase in the debt volume and the credit installment payment. As it is known, the credit and credit card payment habits affect the credit rating by 35%.
It is also worth noting that in addition to the decrease in the credit rating due to the lack of payment, the interest rates of overdraft deposits, which are already used with high interest rates, will also be high and therefore the payment to be made will increase day by day. As it is known, overdraft deposits are interest subject accounts on a daily basis. Therefore, the sooner the debt is closed, the less interest will be paid.