A loan or debit on your account – what should you choose?
Need extra money for expenses? In this case, the most common choice falls on the loan. However, this is not the only way for extra money. We may also decide to apply for debit on your account. What will work better then?
Both the loan and the debit have their advantages and disadvantages. They differ in the way of inference, use, repayment, as well as costs. We must therefore remember that these are other products, although they serve one, namely to obtain additional money for any expenses.
What is the overdraft on the account?
Let’s start with the debit, because the loan is a well understood term, but what each of the debit is, everyone knows. Debit arises basically when we owe money to the bank because we paid too much money from our account.
For example, if we have 100 zlotys in our account and we have paid 150 zlotys, then we are in debit, because our account has a balance of -50 zlotys. Of course, this is only an example, because in this case, the bank usually does not allow the payment of money, so that the balance falls below zero. This is not possible unless we have an account with a debit.
How does an account with a debit work?
We can compare the debit on the account with a quick loan for a small amount, which we can take at any time and many times throughout the duration of the contract for this type of account with the bank. We can use the debit, but it is not necessary when our financial situation is good.
Therefore, when there is a bigger expense, and we do not have the whole amount in the account, we can cover some of it from the overdraft. The negative balance on the account is covered by subsequent payments to our account, and debit fees are calculated according to its amount and time. If we do not make any debit on the account in a given month, then we will not pay a penny for it.
Who can have a debit account?
However, we should remember that the debit account is not automatically granted to every bank customer. Here we must meet similar requirements as in the case of a loan, i.e. we should have adequate income, low expenses, we should be a reliable customer. Most often the bank takes into account our account turnover, so we do not have to provide any additional documents.
Most often the debit on the account is granted for quite low amounts – from several hundred zlotys per month to several thousand zlotys for persons achieving much higher incomes.
Debit or loan – what’s better?
When it happens that we do not have enough money on the account, the debit is a very good solution. Often it is also cheaper than loans, therefore the use of it will not be associated with such high costs. However, we should remember that regular use of debit is also not very good – in such a situation, it is better to limit your expenses.
In addition, the debit will not always work when we need a larger sum for large expenses. Then the only solution will be an installment loan, which will be taken out to the corresponding amount and repaid in installments.