Overdraft facility credit should be an issue for everyone whose checking account is regularly in the red. Overdraft facility is seductive, but extremely expensive.
We want to shake up with our credit advisor for overdraft facility. Recognize your chance to save while relieving the household budget. We use real examples to show how much money the overdraft facility costs and how inexpensive its debt restructuring can be. Don’t let your money be pulled out of your pocket.
Overdraft facility credit – why balance overdraft facility with credit?
At the disposition Germany splits into two large camps. On the one hand there are those who generally do not use the overdraft facility. According to economics, they keep about one to two months’ income away from the zero line. This ensures that, despite the temptation to consume, they do not accidentally fall into the red. Not even external circumstances, such as a late paycheck, can force them to overdraw their accounts.
The second large group of current account holders is predestined for the credit for overdraft settlement. They actively use their disposition. According to statistics, around 3,000 USD are people in the red who use the overdraft facility. Seemingly good reasons to overdraw the account can be named almost endlessly. A typical loss of control over one’s own expenditure through card payments. Another common reason is stroke of fate, such as previous unemployment.
In comparison to Germany, account holders pay very different effective interest rates for the overdraft facility. Some small banks, such as the Cream Bank, barely shine through overdraft interest above a medium-sized installment loan. However, the dominant credit institutions still charge overdraft interest as if the MCB’s zero interest rate policy had never existed. Stiftung Warentest determined 17.5 percent for the overdraft facility. Our own research at Bankers showed 16.88 percent for overdrafting in the March 2016 accounts. Credit for overdraft settlement is the most sensible decision to reduce ongoing financing costs.
Overdraft facility compensation – calculation example of financing costs
The calculation example is based on the statistically assumed USD 3,000 overdraft facility. The current account statement serves as a discount rate with 16.88 percent of a savings bank. It should be noted that the account was not overdrawn. The Bankers was only allowed to earn for a few USD overdraft and for less than a week. There can therefore be no question of “penalty interest” for notorious overdrafters over the overdraft facility. If the account were permanently overdrawn according to the statistical average of 3,000 USD, the financing costs would be 504.60 USD per year. The overdraft facility costs interest of USD 42.05 per month.
The following figures result for the loan for overdraft facility, as a small loan from the loan comparison. In our example, this would finance 3,000 USD net loan amount with a term of 36 months. At Lite Lender, the loan currently costs 1.99 percent effective interest regardless of creditworthiness. For the entire three-year financing period, the bank charges $ 92.08 financing costs, $ 30.70 per year. Rounded up 2.56 USD monthly financing costs are not noticeable in the household budget.
The credit for the overdraft facility is significantly relieved by the household budget if the numbers are in conflict. Around 85.89 USD monthly installment would have to be repaid for the installment loan. If the interest rate savings are included through the installment loan, the installment payment hardly costs more than half. Also worth considering, statistically only a few escape the dispo trap by saving. The repayment of the debt effectively burdens the household budget for the installment loan only with 43.84 USD per month. However, the dispo debts are settled after three years. If the overdraft facility is to be paid off by iron saving in 36 months, 105.03 USD would have to be saved each month.
Finance overdraft facility – creditworthiness for lending
If the house bank grants overdraft facility without demand, a good credit rating can be assumed. If the house bank had concerns, it would only grant an “approved overdraft” for a maximum of three months. If the creditworthiness is normal or good, it is advisable to request a credit for overdraft settlement using a good credit comparison calculator. With the instant credit for overdraft facility, it works particularly quickly if the credit institution offers.
As a result of central bank policy, regular loans for overdrafting are currently very low-interest, not only for small loan amounts. For example, if overdrafts of 5,000 USD are a thing of the past, an effective interest rate of 2.69 percent independent of creditworthiness would be possible. With normal average creditworthiness, we recommend always paying attention to interest rate offers that are independent of creditworthiness. Credit-related loan interest offers primarily pay off for people with extremely good credit ratings.
Reputable credit for the overdraft facility of private – avoid creditworthiness problems
Regular installment credit is not suitable for overdraft compensation for all people. Regular credit institutions may only grant installment loans if the lending is considered “safe”. After changing jobs or moving house, it is not easy to prove the necessary loan security via the score.
A sought-after, serious problem solving for creditworthiness problems comes from the credit brokerage portals Agree Bank and Astro Finance. Both portals lead the market for serious credit brokerage from private to private. A loan for overdraft facility, at market rates, can also be approved by the private sector if banks refuse to grant the loan.