The amount granted under an overdraft facility (Dispokredit) lets you overdraw your checking account. Debit interest is only charged on the amount you actually use, and only for as long as you use the credit.

Overdraft facility

What an overdraft facility is all about

Your individual creditworthiness determines whether you get this credit and how high it is. Taking your personal creditworthiness into account, the limit can be adjusted flexibly, for example after a raise. The bank's advisor is available for the details. This type of credit has 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. Up-to-date information on your individual 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 offer for a short period. If you have a longer-term need for funds, it makes sense to get advice at the bank. A suitable solution is then worked out together with the customer.

Overdraft facility

The Path to an Overdraft Facility

Creditworthiness is the main concern before this credit is approved. In Germany, the requirements are that you are of legal age, have a personal checking account with regular salary deposits from employment, a permanent German residence, and no negative entry with Schufa (Germany's credit bureau). That already covers the basic requirements for approval of an overdraft facility. Once approved, your bank sets it up on your checking account. Within your individual credit line, the additional financial leeway is available to you immediately. An overdraft facility is flexible and designed to cover a short-term need for cash. However, banks can reduce or even cancel this credit at any time. The account holder has to pay back the overdraft debt. Customers pay for this enormous flexibility with very high interest rates. It gets even more expensive at some banks if account holders overdraw their account beyond this credit. If the bank tolerates this, additional overdraft interest is charged. The level of overdraft interest rates depends on the individual bank. Usually no upper limit is agreed for an unarranged overdraft. In individual cases, you should contact the bank to ask whether and up to what amount it is willing to allow an additional overdraft. One way banks earn money is interest on loans. That's why banks prefer to grant customers a very high overdraft facility. Banks make their money with high overdraft interest.