The overdraft facility is still hotly debated due to the high debit interest rates. It is incredibly tempting, because it keeps adding to the current account and thus offers money when it is needed.
Many customers no longer perceive the high costs resulting from the interest charge. However, if the account is permanently in the red, then you already have a serious problem. This problem can be remedied with a credit for the overdraft facility.
The credit line for overdraft facility settlement
The features of the overdraft facility and the master facility facility are the same. Both have an unlimited term, and the credit facility can be used as required. Repayment is made with a monthly minimum amount for the credit line and can be accelerated at any time with special payments. However, here too there is a risk that the borrower will exhaust the credit line again and again, so that he will eventually reach his financial limits here too. The willingness to finally get rid of the minus is therefore an important prerequisite for the call credit.
The installment loan – finally get out of debt
If you choose an installment loan as a loan for overdraft facility, you guarantee yourself better control and lower interest rates. The loan amount is paid out in one amount and used immediately to balance the overdraft facility. The loan is then repaid in fixed monthly installments and over the selected term. Further accesses, such as the credit line, which is repeatedly topped up by repayment and thus enables funds to be drawn up to the credit line, are excluded here.
Balance credit with credit?
A credit to offset the overdraft facility? Yes, it may sound paradoxical, but it is actually a profound solution if the requirements are considered. Debit interest rates for the overdraft facility are between 8 and 12% pa, which is well above the interest required for installment loans or call credits. If the bank has also granted the account holder a tolerated overdraft that goes beyond the overdraft facility, double the overdraft interest is due for this.
If you can calculate, you will quickly notice that the account holder has to pay a lot of costs. With a credit line or an installment loan, depending on the overdraft amount, you can in principle “reschedule” and the interest burden is significantly lower. However, this measure only really makes sense if the overdraft facility is canceled immediately after settlement. Otherwise, the debt spiral will start again, faster than ever.