Counter credit refers to a type of credit given by a bank to its customers. A counter credit facility is a convenient tool for customers who may have unexpected expenses or a temporary shortage of funds.
It’s important for customers to understand the terms and conditions of the counter credit facility offered by their bank, including the interest rate, repayment terms, and any fees that may be associated with it. Regular monitoring of their account and responsible use of the counter credit facility can help customers avoid financial difficulties and maintain a healthy financial situation.
What is counter credit?
Counter credit is a form of credit granted by a bank to its customers as a short-term overdraft solution. Counter credit allows customers to transact even when they don’t have sufficient funds in their account, as the bank covers the shortfall. The customer must repay the borrowed sum, together with interest and fees, within an agreed timeframe.
How does counter-credit work in the banking system?
In a banking system, counter credit works as follows:
- The customer makes a transaction that exceeds their available account balance.
- The bank, through the credit facility, temporarily covers the deficit in the customer’s account.
- The customer is expected to repay their interest and fees, within a specified time period.
- If the customer does not repay the amount borrowed, the bank may charge additional fees or take legal action to collect the debt.
Why should you care about counter credit?
- It can provide a convenient way to manage unexpected expenses or a temporary shortage of funds.
- It can help avoid bounced cheques or rejected transactions.
- Regular or improper use of the facility can have an impact on your credit score.
- The bank may charge interest on the counter credit and fees for late or non-payment.
It’s important to understand the terms and conditions of the counter credit facility offered by your bank, including the interest rate, repayment terms, and fees.
How do check Counter Credit on Bank Statement?
To check your counter credit on your bank statement, follow these steps:
- Log in to your online banking account or visit your bank to obtain a physical copy of your statement
- Review the transactions
- Look for a line item or notation indicating the counter credit usage and the amount borrowed.
- Check the total balance on your statement
- Review any fees or interest charges associated with the counter credit usage
By regularly checking your bank statement and monitoring your counter credit usage, you can keep track of your finances and ensure that you are using the facility responsibly.
Types of Credit
Types of credit include:
- Revolving credit
- Installment credit
- Secured credit
- Unsecured credit
- Consumer credit
- Business credit
- Mortgages
- Auto loans
- Personal loans
- Student loans
- Credit cards
Each type of credit serves a different purpose, terms, and conditions, like interest rates, repayment periods, and collateral requirements.
7 Things to know about Counter Credit
7 things to know about counter credit:
- It is a type of credit offered by banks to customers. As a temporary overdraft facility.
- Customers are allowed to make transactions. Even, if they have insufficient funds in their accounts.
- The bank covers the deficit, and the customer is expected to repay the amount borrowed, along with any interest and fees, within a specified period.
- It can provide a convenient way to manage unexpected expenses or a temporary shortage of funds.
- The bank may charge interest and fees for the use of the facility.
- Regular or improper use of the facility can impact the customer’s credit score.
- It’s important to understand the terms and conditions of the counter credit facility offered by your bank, including the interest rate, repayment terms, and fees.
Conclusion
Counter credit is a temporary overdraft facility. Understanding counter credit and its impact on your finances is important for the responsible use of the facility. Regularly checking your bank statement and monitoring your counter-credit usage can help you stay on top of your finances.
