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Overdraft facility: Everything you need to know about it


How much is the interest on a credit line?

As already mentioned, the flexibility of a disposable cost the bank a lot. Compared to a normal installment loan, the interest for a overdraft facility is much higher. According to the financial test, the average interest rate is 9.48 percent! For comparison: According to Statista, the average interest rate for an installment loan was 4.84 percent at the end of 2018.

However, the discount rate differs from bank to bank. You can see how high this is at your bank either on your account statement or online on the website. The banks have had to make their overdraft rates public since 2016. However, caution also applies here: Because some provide so unclear information that the exact costs are ultimately not presented clearly enough. This also criticizes the financial test.

The overdraft interest is due for every euro you use to deposit into your account – until you settle it again. The fees for this are debited on a quarterly basis.

Here is a case study: You have an overdraft limit of 2,000 euros in your account at an overdraft rate of 9.48 percent. You need money at short notice and overdraw your account by 1,000 euros. After 30 days you have cleared your account again. For the period in which you have used the overdraft facility, you pay interest of EUR 7.90 at the end of the quarter.

Tip: With the interest calculator you can easily calculate yourself what you have to pay for your overdraft facility.

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