As of: March 15, 2024, 4:00 p.m
By: Marco Blanco Ucles
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Short on cash and using the overdraft facility can cost a lot of money.
There are much cheaper alternatives.
The month is progressing, the salary hasn't arrived yet, the emergency fund has been used up and you have to make a larger expense?
This can quickly cause you to end up in the red with your checking account, which is generally a great way to save money.
The overdraft facility can be used.
However, this may be expensive for customers.
Although banks and savings banks only have to pay 4.5 percent for borrowing money from the European Central Bank, the average overdraft interest rate is currently 12.06 percent.
This is reported by the specialist portal
Finanztest
.
Some banks charge no overdraft interest, others charge over 17 percent
Depending on the bank, the overdraft can be really expensive - but there are cheaper alternatives.
© Joko/IMAGO
According to
Stiftung Warentest,
the differences between individual banks are enormous.
While the cheapest bank in Germany charges no overdraft interest at all for an account model, another institution charges an impressive 17.2 percent.
Politicians have therefore already called for an upper limit.
Overdraft facilities are usually billed quarterly.
If you don't get out of trouble by then, you'll usually still have to pay compound interest.
But it doesn't have to come to that.
There are several ways to avoid the expensive overdraft interest:
1. Take out a line of credit
You save money with a line of credit.
To do this, you need to agree on a fixed credit limit with your bank from which you can draw money flexibly, says
Auxmoney
.
However, you must not exceed the agreed amount when withdrawing money, this is important.
But what exactly are the advantages of the credit line?
On the one hand, you only have to pay interest on the amount withdrawn.
And on the other hand, you can repay the installments flexibly - in contrast to the installment loan.
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2. Ask family or friends
Even if many people shy away from it, there is no shame in asking family members or friends to lend money, as long as it is within a certain limit.
Your loved ones will be happy to help you out if you are in a bit of a financial situation.
You will also be doubly motivated to pay back the money you borrowed as quickly as possible.
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3. Take out an installment loan
Another cheaper alternative to an overdraft is the installment loan, as you have to pay significantly lower interest rates.
“It is important that you pay attention to the monthly installment amount and check whether you can repay the installment without any problems,” advises
Auxmoney
.
You can take out installment loans either at your bank or at an online credit marketplace on the Internet.