Factors That Determine FNB South Africa Overdraft Limit

Factors That Determine FNB Overdraft Limit In South Africa

In this article, I’ll share with you all these factors that determine the FNB South Africa Overdraft limit.

After applying for an FNB overdraft, the bank is the one that determines the amount you can access or the limit.

Several factors come into consideration before determining your limit.

The overdraft is meant to help you when you are facing unforeseen expenses or situations.

Factors That Determine FNB Overdraft Limit In South Africa

The overdraft serves as a backup because you can access it immediately.

Here are the factors that determine your FNB overdraft limit in South Africa:

1. Operating Cycle Validity

Apart from the fact that FNB is an institution where you can get financial assistance, it is also in lending money.

Before allowing you to access the overdraft, the bank has to ensure that the money they lend is repaid with interest. 

As a result, when deciding on an overdraft cap, the bank will examine the validity of the operating cycle forecasts that you, the borrower, have provided for the proposed overdraft limit.

The factor helps the bank determine if your flow of money projection will be as you are saying.

Hence, the bank comes with a conclusion on if you can repay the overdraft on time.

2. Your Financial Health Determines Your Overdraft Limit In South Africa

The banks also do access your financial health to determine an overdraft limit.

During the assessment, the bank considers ratios essential to determining your efficiency to repay the overdraft, including the number of days you will take to repay the loan, among other considerations.

There is also a consideration of the quick ratio and current ratio—the two bits help determine your short-term solvency.

The bottom line of determining your financial health is to help the bank know if you can repay the overdraft.

3. Past Track Record Can Determine Your Overdraft Limit

FNB bank also takes into consideration your past record with the bank.

The bank will access your cheque account to determine if in the past, such as credit score and also transaction history.

The bank will also evaluate to know how old your account is.

If you opened the account ten years ago and it has been active for those years, you stand a chance of a high loan limit compared to a 2 years old account.

Your account ought to have a good standing history for a chance of a higher limit.

More so, the bank will evaluate if you had been issued with credit before and your payment pattern and time.

Those are the factors that determine the FNB South Africa Overdraft limit.

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