What Is A PDC* and How Do You Use It?

What Is A PDC* and How Do You Use It?

Unlock the powers of a post-dated check* and use it to your advantage.

You’re only a few steps away from purchasing your dream house or booking a flight to your dream destination. You’ve already applied for your loan, but reading the payment terms is making you scratch your head in wonder. Don’t worry! We’ll guide you through every question you might have.

What’s a PDC?

PDC is short for post-dated check, which is given by an issuer to a recipient as form of payment ahead of time.

What makes a PDC different from a regular check?

You use the same check format for a regular check and a PDC. The only difference is the date you indicate on the upper right-hand side. On a regular check, you write the current date, so your recipient can instantly deposit it on the same day. On the other hand, the PDC includes a future date, which allows the recipient to deposit the check on the date stated.

How do I get my own checks?

People with checking accounts are automatically given checkbooks that they can use any time. If you don’t own a checking account, you can apply for one at your preferred bank by providing proper identification, submitting the completed forms and document requirements, and giving the minimum initial deposit.

How can I use PDCs?

PDCs can help you make staggered payments to any recipient. For your monthly loan payment, you can write and submit a set of PDCs to the bank in one go. Aside from you not worrying about transferring money monthly, this process guarantees the bank that you have the firm intention of fully repaying your loan.

On the date indicated, the bank automatically deposits your check for clearing. It’s important to fund your checking account with the corresponding amount or else your check will bounce and you’ll be forced to pay insufficient fund fees, late fees, and other charges. To help you track your finances, you can list your transactions in the first page of your PDC.

What do I write on a PDC?

Review the terms of your loan. Your bank can provide a breakdown of your monthly installment amount depending on the approved loan amount, loan period, and interest rate. For example, you loaned P65,000 for a span of 12 months with an annual contractual rate of 29.9%. The loan commenced on March 24, 2019 and the next statement date is on April 12, 2019.

To make it easy for you to remember, prepare 12 PDCs with the same day of the month on it. Your payment due date is approximately 19 days after your statement date, Write down the agreed amount for every check. Your first monthly installment amount may be higher because of the pro-rated amount from the loan commencement date to the first statement date. In this case, your PDC for April 28, 2019, your first due date, will have a higher amount which may also contain some fees and charges. While the remaining 11 PDCs for May 28, 2019 to March 28, 2020 should have the same amount.

Illustration:

Amount to be paid
Total Loan Amount P65,000
Loan Tenor 12
First PDC (April 28, 2019) P7,489.62
Remaining 11 PDCs (May 28, 2019 to March 28, 2020) P6,333.47

Aside from the date and amount (in number and word format), carefully write down the recipient’s name and refrain from making any erasures or errors that would make the PDC void. Once all the blanks have been filled correctly, scribble your signature on the lower right-hand line. Submit these PDCs to your bank and you’re on your way to effortless loan payments!

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