Sometimes it happens that monthly expenses exceed income. If one has no savings, the only option is to go into the red with the account. Many experts warn against exactly this situation. But why is it not good to be in the red with the account and what can be done if it becomes the norm? This is what you will learn in our guidebook. For a better overview we have divided the topic into different sub-items. This way you can find exactly the information that is really relevant for you. But now enough of the preliminary information. We hope you enjoy reading and informing yourself.
1. Account in the minus – risks and costs
Many banks advertise an overdraft facility with flexibility and financial freedom. Partly this is true, because an overdraft facility on the current account makes it possible to overdraw the account up to a fixed amount in case of financial bottlenecks. However, you should consider in advance whether you really need an overdraft facility and up to what amount. Because an overdraft facility can tempt you to spend more money than you actually have. Thus, an overdraft facility on the own current account increases the risk of indebtedness increasingly.
Certainly, there are sometimes situations in which it is unavoidable to go into the red with the account. This is the case, for example, when the salary is late and urgent bills must be paid on time. In such situations one should absolutely pay attention to the fact that the account is fast again in the plus.
This way you make sure that it does not become a normal case. In addition, the costs incurred when the account is in the red are kept to a minimum. But how high are the costs exactly and what should one absolutely pay attention to?
These costs are incurred when the account is in the negative:
In order to be able to keep the account in the minus, one needs an overdraft facility. As soon as you use the overdraft facility, the bank charges so-called overdraft interest. The amount of the overdraft interest varies considerably from bank to bank. Currently, the cheapest provider pays 6.5 percent overdraft interest per year and the most expensive provider 17 percent overdraft interest per year. These interest rates not only sound very high, they also are. The overdraft facility is therefore one of the most expensive loans that you can use. The good thing is, however, there are only costs if you are in the red with the account. If the account is in the plus, the bank does not charge any fees. For a better perception about the amount of costs we have prepared an example:
Cost example: Paul has been 90 days with his account with 2.000 Euro in the minus. The overdraft interest rate of his bank is 14 percent per year.
Calculation of costs = used period × used amount × overdraft interest ÷ (days in a year × 100)
Calculation of the costs = 90 × 2.000 × 14 ÷ 36.500
Result of the costs = 69.04 euros
Paul has to pay 69,04 Euro for using the overdraft facility.
This example shows very clearly what costs are actually incurred when the account is in the red. If Paul does not change the current situation, he would have to pay about 280 euros in overdraft interest per year. In addition, there is no monthly installment for repayment of the overdraft facility. Each customer of the bank is therefore responsible for minimizing the minus amount on the account.
If you do not manage that, you are caught in the Dispo trap and there are permanently new costs. So what can you do to prevent this from happening in the first place, or if you can no longer manage to balance your account on your own?? This is what you will learn in the next section.
2. Account in the minus – 3 ways to balance the current account
To prevent the risk of debt at an early stage, we recommend a maximum overdraft facility of 500 euros. So you can bridge financial bottlenecks and not run the risk of overdrawing the account too much. Is it nevertheless happened, there are three clever ways out of the minus.
Balance the current account with a cheap installment loan
The first and at the same time best option, if the account is in the minus, is the acceptance of an installment loan. installment loans are much cheaper than overdraft facilities. Up-to-date one receives favorable installment credits under 4 per cent interest per year. In addition, with an installment loan, you pay a fixed monthly loan installment. This reduces the debt month by month until the loan is fully repaid.
The height of the installment credit should not be calculated however too scarcely. We recommend the current amount of the minus amount on the current account and if there are still open bills until the next salary, add them to the amount. Is the account for example with 2.000 Euro in the minus and still have to pay bills in the amount of 1.000 euros are paid, one should take out an installment loan in the amount of 3.000 Euro to take out. This ensures that the account is not immediately again in the minus. If you proceed as described, this is the optimal solution to balance your account in the long term.
To help you find the best possible installment loan, we have compared numerous providers with each other. Particularly recommendable in this context is the installment loan of Creditplus Bank . Compared to other providers, the installment loan of Creditplus Bank is particularly favorable with an interest rate starting at 1.99 percent and offers further convincing advantages. Thus for example once in the year the possibility exists of suspending a credit rate. Especially if you have unexpected expenses coming up, this is a good option to give you additional financial leeway.
Also very pleasing is that you can design the installment loan of Creditplus Bank very flexible. You can, for example, a loan amount of 1.000 to 100.Choose 000 Euro. In addition, through the individual choice of the loan term between 12 and 120 months, there is the possibility to adjust the amount of the monthly loan installment ideally to your needs. As you can see, the installment loan of Creditplus Bank is a very worthwhile offer that convinces with attractive conditions as well as with many advantages. So it's no wonder that the installment loan of Creditplus Bank has already been named test winner several times. Secure now the favorable installment loan of the Creditplus Bank, if your account is in the minus.