Bank overdraft authorization

Verified 22 October 2024 - Directorate for Legal and Administrative Information (Prime Minister)

Your bank account balance is negative? You are in a situation of bank overdraft. This means that the amount charged to your account is greater than the amount credited. You can arrange with your bank an overdraft authorization. Here are the rules to know.

If you are in bank overdraft, the bank can continue to operate your account. It agrees to carry out debit transactions (e.g. direct debit) when the provision is not sufficient.

Warning  

There is no right to bank overdraft. Your bank is never obliged to accept that your account becomes debtor.

The bank may authorize an overdraft on an exceptional basis and without prior consent. In this case, it is usually a small overdraft for a limited period.

You can also provide with the bank an overdraft authorization in the account agreement.

You can also ask your bank for an overdraft authorization exceptional.

This exceptional authorization can be requested at an agency or by sending an email or a letter to your bank. You can do this using the following template:

Request an occasional overdraft for a few days

The duration of the overdraft is provided for in the account agreement or in the exceptional authorization.

However, the overdraft may not exceed 3 months consecutive.

If it is more than 3 months, the bank must make you a supply of consumer credit. This offer is valid for 15 days. You have 14 calendar days after the offer has been signed to retract you.

The amount of the overdraft authorization is provided for in the account agreement or in the exceptional authorization.

Your bank must indicate on each monthly statement the limit of the overdraft authorization you receive.

The bank overdraft is not free. The bank charges you a fee, called agios.

Please note

the account agreement may provide for no action for occasional overdrafts of a limited amount.

Amounts of shares

There are 2 types of agios: agios lump sums and agios proportional.

Most banks charge a minimum flat rate for any overdraft situation irrespective of its amount and duration.

If the amount of the overdraft used is €400 or more, proportional actions you are also charged. These actions are sums calculated on the basis of the duration and average amount of overdraft usage at an interest rate: annual percentage rate of charge (APR).

The APR must be less than wear rate.

The formula for calculating proportional shares is as follows:  overdraft amount X number of days X APRC / 365

Example :

You have an overdraft of €950 during 15 days at APRC of 18%.

The amount of proportional shares for this period shall be: 950 X 15 X 18 / 100 / 365 = €7.027.

Sampling of aircraft

The accounting and payment of the aircraft are generally quarterly.

The bank must indicate on each monthly statement of account the APR used.

The total amount of the charges levied must be shown in the annual fee summary published by the bank in january.

Exceeding the authorized overdraft results in additional costs.

You will have to pay the agios at the rate provided for the authorized overdraft and the agios at a increased rate for overdraft limits.

The premium rate is communicated to you prior to any authorized overdraft transactions being recorded.

Like any annual percentage rate of charge (APR), it must be lower than wear rate.

Of forcing cost and other intervention commissions may also be applied to you. They are different if you have or have not purchased an offer for essential banking services for clients in financial fragility.

Please note

the persons recognized as over-indebted are considered to be in a fragile financial situation.

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General case

You can be charged a maximum of €8 by operation and by €80 per month.

Customer in financial fragility

Customer with a specific offer "Fragile customer"

You can be charged a maximum of €4 by operation and by€20 per month.

Customer not benefiting from a specific offer "Fragile customer"

You can be charged a maximum of €25 per month.

If the authorized overdraft is exceeded, you may also be charged a fee of payment incidents. The bank may also decide to close your account and sign up for the Personal Credit Reimbursement Incident Files (FICP).

You can ask at any time to your bank of to revise downwards or upwards the overdraft authorization. To do this, you need to contact your bank advisor. In some banks, you can apply online on your customer area.

The bank may also lower the ceiling or duration of the overdraft on its own initiative. However, it must comply with the conditions laid down in account agreement or the exceptional overdraft authorization.

If you find that the review is abusive, you can enter the banking ombudsman. You can also go to court.

Who shall I contact

An overdraft authorization may terminate at your initiative or at the bank's initiative.

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Customer Initiative

You can at any time ask your bank to stop an overdraft authorization. In principle, you should send a letter to your bank. Contact your bank advisor to find out more about how to cancel.

Bank Initiative

Your bank may also, in some cases, terminate your overdraft authorization.

If you have an overdraft authorization indefinite, your bank may terminate this by registered letter with acknowledgement of receipt. To do this, the bank must give advance notice of 2 months minimum. However, in the case of a legitimate reason, the bank may decide to terminate the overdraft authorization without prior notice. This is especially the case if you do not respect the conditions of the bank overdraft.

If you have a fixed-term overdraft permit, your bank can only stop it if you have payment failures. In that case, it can do so without notice.

If you feel that the termination is abusive, you can enter the banking ombudsman. You can also go to court.

Who shall I contact

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