How do you get out of the overdraft facility?

Unexpected costs arise and you don’t have an emergency fund saved? Anyone who overdraws the account pays high overdraft interest.

Unplanned costs, a major investment or temporary financial bottlenecks: it can happen quickly that the account is overdrawn – and you find yourself in overdraft, or overdraft for short. But be careful: Although the overdraft offers short-term financial flexibility, it is one of the most expensive forms of credit due to its comparatively high interest rates, the banking association informs in a blog post (as of September 19th). This makes it all the more important to balance the overdraft quickly in order to avoid unnecessary costs. How can this be achieved?

Account overdrawn: How can you get out of the overdraft?

Sometimes unexpected expenses arise and it can quickly happen that your account is overdrawn. But account holders pay high interest rates. (Symbolic image) © Jens Kalaene/dpa

Get an overview of inclusions and exceptions – apply a red pencil

Is money running out? Experts recommend first getting a clear overview of your account balance and regular income and expenses. You can use online banking for this. Or, for example, you keep a household book – as the North Rhine-Westphalia Consumer Center explained, you should record “all expenditure items from purchases to additional payments for prescriptions to the electricity bill due”. This makes it easier to identify potential savings. Subscriptions or expensive cell phone contracts could then be put to the test, as could high expenses for electricity or insurance.

You can also think about how you can possibly develop additional sources of income. “For example, selling items that are no longer needed via online platforms or flea markets can help in the short term,” says the banking association’s blog post.

Reduce or restructure overdrafts in a targeted manner

With a repayment plan you can determine how much money you can raise each month to repay the overdraft, according to the banking association, among others, in the blog post. If you want to avoid high overdraft interest, you can think about an installment loan. However, you should inform yourself in detail beforehand and always compare offers thoroughly.

Avoid future overdraft use – save up your “emergency fund”.

However, it is generally recommended that you keep an overview of your finances in the long term and set aside a so-called emergency fund for unforeseeable expenses. This emergency fund should “ideally amount to three net monthly salaries”. And, that’s what it also says in the blog post mentioned Bankenverband.de: “In the future, keep track of your finances with a budget book.”

Retention periods: This is how long common documents must be kept

View photo series