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Overdraft facility – when should I convert it into a normal loan?

Monthly credits in the form of income

Monthly credits in the form of income

Almost every account holder receives an overdraft facility in connection with their own checking account, which receives monthly credits in the form of income. In most cases, the overdraft facility is granted on the basis of the amount of income, whereby the amount of the overdraft facility is based on different assessment bases for the banks.

The overdraft facility is a wonderful thing if you want to use the high-end measurement technology quickly, for example, for a cheap notebook or the latest MP3 player or as a hobbyist and therefore need money beyond the monthly budget. Here you can use the disposition to make such purchases spontaneously. However, since the overdraft facility is a very expensive loan option, it should only be used for a limited time. So it is not advisable to make permanent use of the overdraft facility in order to possibly make a living. Anyone who uses their overdraft facility should do this in a targeted manner and also set clear goals with regard to compensation. Otherwise, buying new women’s clothing, inexpensive software or trendy tickets for concerts and musicals on overdraft will quickly become a habit …

Interest rates are again increased significantly

Interest rates are again increased significantly

Unfortunately, however, very few people are so disciplined that they can easily balance themselves. At the latest when the overdraft facility is exhausted for a very long time, consideration should be given to converting it into a consumer loan. This balances the account and is repaid monthly at contractually agreed rates. On the one hand, this saves high overdraft rates, and on the other hand, this obligation helps many consumers to manage their finances rather than a voluntary restriction to offset the overdraft facility.

It is also important to know that if the disposition limit is exceeded, interest rates are again increased significantly. Anyone who always wanders at the limit of their overdraft facility should also consider converting to a loan, in order not to end up out of the overdraft facility at some point due to premature debits or use of the Maestro card.

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