The overdraft facility – or overdraft facility – is a loan that banks provide to their solvent customers. The loan is applied for quickly and requires no paperwork. A call is often sufficient and the disposition is provided. A good idea for the short-term financial bottleneck. However, you should pay attention to a lot when using it, because the overdraft facility can become a debt trap. Then often only the credit helps to balance the account.
The disposition and its consequences
One call is all it takes and the customer can already have a certain amount at their disposal. No tedious waiting and comparing, no annoying questions, simple and uncomplicated, the overdraft facility can be a good help for short-term financial bottlenecks. It is intended, for example, if an urgent invoice is to be paid at the end of the month but the account is empty, which is not a bad thing, the overdraft facility regulates it. The overdraft facility makes it possible.
At the latest when the incoming salary no longer covers the overdraft facility, a credit for the account settlement should be considered. You think that won’t happen? This happens to a lot of customers, especially when nothing has been paid into the overdraft facility or remains standing. Banks calculate their interest every quarter and so the loan amount increases more and more.
If you are aware of this and the overdraft facility is exhausted, payment in installments would not be particularly recommended. The overdraft facility is the most expensive loan. There are banks that charge a whopping 15% interest. You can work out the amount of work added every quarter. A cheap loan for the account settlement is recommended.
Many customers make mistakes here too. If the loan is approved, the account is smooth again, but the overdraft facility remains. The temptation to use it again is very great. The result of this, there is again a picture until it is completely exhausted with a renewed credit for the account settlement.
But the customer should know that a bank will not go along for long. At some point, the credit rating is reduced, especially if the overdraft facility is used beyond the credit line. The overdraft facility itself appears only as a provision in the Credit Bureau, but the overdraft of the credit line is a negative entry. If the account is balanced, the overdraft facility should either be removed entirely or at least reduced to a small amount.
A tip: If you are tempted to use the overdraft facility but also the credit card, you should perhaps consider this without using these credit options. If you do not replace the overdraft facility or at least pay it back, it can come to the point that you can no longer withdraw anything from your salary. If the house bank does not make an offer on its own, such as the overdraft facility, a loan can be searched for the account settlement.
The loan from the house bank
If you are now looking for a loan, you do not have to take it out from your house bank. The Internet offers a whole range of cheap loan offers. A credit comparison should be carried out in order to obtain a cheap loan for the account settlement. As a rule, the online banks offer better conditions than branch banks. The reason these banks do not operate a large branch network with appropriate staff levels and consequently have low costs for rent and personnel costs.
The overdraft facility is expensive, and double-digit interest rates are not uncommon. A loan for an account settlement is much cheaper. The customer pays it off in constant installments and can foresee when he will be debt free. However, the focus should not only be on the interest rate, a cheap loan has free special repayments and one or two installments. Of course, the annual percentage rate must also be right. This interest rate tells you how expensive the loan is in the end.
In most cases, the amount of interest depends on the customer’s creditworthiness. If he has a good income and an unencumbered Credit Bureau with no negative entries, his creditworthiness is good and receives a favorable interest rate.
The exceptional situations
Those who handle the overdraft facility carefully, i.e. only use it in exceptional situations and also return it immediately, will of course not be caught in a debt trap.
Anyone wishing to apply for a loan to balance the account must meet certain conditions. So the income must be so high that it has a attachable share. There must be a permanent position, which is not limited and does not include a trial period. The Credit Bureau must also be clean, there must be no negative entries. If so, it will be difficult for conventional banks to borrow. In this case, there are the Credit Bureau-free loans that the customer can also find on the Internet.