Credit practice is as old as humanity itself. Though they seem to evolve as time goes by, they still fulfill the same purpose of alleviating financial emergencies. An Overdraft is just another interesting form of credit. When you need some emergency cash, an Absa Overdraft with your cheque account could be the answer for you.
Through the course of this article, we will take a deep dive into all there is to know about.
What is an Overdraft?
An overdraft is an extension of credit that a financial institution grants to a customer when his/her account reaches zero. An overdraft occurs when there are no more funds in the account in question, but an outstanding transaction is processed through the account. This transaction leads the account holder incurring a debt.
How does Absa Overdraft work?
Do you want a reserve of extra money available in your account, just in case? An overdraft on your cheque account could be all you actually need.
Most Times it’s easy to lose track of how much money is in your account when you’re busy. Payday can sometimes seem a long way away. An overdraft from Absa provides you with a safety net of additional money, up to a pre-agreed limit. Enough to cover everyday expenses when there’s nothing left in your account. There are three different overdraft options, they include;
- A fixed overdraft option with a limit that revolves and is reviewed each year. You can keep using the funds up to your agreed overdraft limit, as long as you make regular repayments. At the end of your contract year, your limit is renegotiated.
- A reducing option with a limit that decreases as you pay it off each month. This is a great option. Especially if you know you’ll only need to borrow for a short while and prefer not to have a revolving limit.
- An indefinite option with a limit that revolves for an unspecified period. You can keep using these funds, until your agreed overdraft limit, as long as you make regular repayments.
Qualification requirements for an Absa Overdraft.
The following requirements are necessary to qualify you for an Absa Overdraft;
- In order to qualify for an Absa loan, you need to have a minimum monthly income of R2 000 and a good credit record
- You must also either have an existing Absa Bank cheque account or be applying for one.
- Prospective Applicants must have a valid ID (as a South Africa citizen) or passport number (as a temporary citizen)
- If you are married in a community of property, you need your spouse’s consent to apply.
When you meet all these criteria, then you’re just a step away from getting your application approved. As a new customer, all you have to do is visit the official Absa platform and apply from there.
How to apply for Absa Overdraft?
Absa bank in their utmost will to serve have put necessary mechanisms in place to ease application. Below is all you need know about the smooth application process Absa bank provides;
Existing Customers:
Log in to your account today and apply.
New to bank customers:
- Take up a cheque account and apply for an overdraft.
- Visit your nearest Absa branch.
- Contact Absa customer service on 0860 100 372.
Key points to note before applying for an Absa overdraft
Before applying for an overdraft or any financial product at all, it is important to know the facts about that product. Some key points to note about Absa overdraft includes;
Repayment term
Absa overdrafts come with a flexible repayment plan. You only get to pay a once off initiation fee of up to R1 207.50 on a new facility. A monthly service fee of R69.00 and monthly interest on the portion of the overdraft limit that you used.
Interest rate
Absa bank uses the Personalised Annual Percentage Interest Rate (APR), up to the maximum of Prime +10,5%.
Estimated interest repayment:
The estimated monthly interest repayment for an overdraft limit of R15 000 at an interest rate of 15% per month where R8 000 of the overdraft limit has been used is R100.
Benefits of an Absa Overdraft?
Some notable benefits of obtaining an overdraft includes;
- An overdraft is linked to your cheque account, making it easy to track and manage transactions.
- Helps to maintain an excellent credit history by avoiding debit reversals due to insufficient funds.
- Convenience, because your overdraft facility is granted for an agreed time period
- Peace of mind, knowing that you can cover any shortfalls in your account or monthly cash flow, up to an agreed limit
- You only pay interest for what you use.
- Get an optional credit protection plan to settle the outstanding balance in case of death, disability, dread diseases or retrenchment.
Conclusion
Getting an overdraft can go a long way in mitigating personal financial emergencies. Be it for health, home or maintenance, technology has eased literally every process for our convenience. The only distinction between an overdraft and personal loan is the fact that an overdraft drawer has to own an account with the financial institution to qualify.