Overdraft Credit (Dispokredit): Secure Your Financial Wiggle Room

With the amount your overdraft credit allows, you can overdraw your checking account. Debit interest is charged only on the amount you actually use, and only for as long as you use it. Your individual creditworthiness determines whether you get this credit and how high the limit is. Based on your personal creditworthiness, the overdraft limit can be adjusted flexibly, for example after a raise. Your bank advisor can give you the details. This kind of credit comes with numerous advantages. You get a personal line of credit at your free disposal. Applying for it and using it is quick and easy.

Because your salary keeps coming into your checking account, flexible repayment is possible. The current information on your account statement ensures transparency at all times. There is no set time limit for repayment. However, you must meet the requirements for being granted this credit. That said, this type of credit is only a usable option for a short period. If you have a longer-term need for funds, it makes sense to talk to your bank. Together with the customer, the bank works out a suitable solution.

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How to Get an Overdraft Credit

Creditworthiness comes first before this credit is approved. The requirements are being of legal age, a private checking account that regularly receives income from employment (not self-employment), a permanent residence in Germany and no negative Schufa entry (Germany's credit bureau). That already covers the basic conditions for approval. Once approved, your bank sets it up on your checking account. Within your individual credit line, the additional financial leeway is available to you right away.

An overdraft facility is flexible and designed to cover a short-term need for cash. However, banks can reduce or even cancel it at any time. The account holder must pay off the overdraft debt. Customers pay for that enormous flexibility with very high interest rates. At some banks it gets even pricier when account holders overdraw their account beyond this credit. If the bank tolerates it, additional overdraft interest is charged. The level of overdraft interest rates depends on the bank. There is usually no upper limit agreed for an unauthorized overdraft. In individual cases, you should contact the bank to ask whether and to what amount it is willing to allow an additional overdraft. Interest on loans is one way banks make money. That's why banks prefer to give customers a very high overdraft limit: they earn their money from high overdraft interest.