Account in the minus – 3 ways to balance the current account!

Account in the minus

Sometimes it happens that the monthly expenses exceed the income. If you have no savings, the only option is to go into the red with your account. Many experts warn against exactly this situation. But why is it not good to be in the red with the account and what can you do if it becomes the norm? This is exactly what you will find out in our guidebook. For a better overview, we have divided the topic into several sub-items. So you can find exactly the information that is really relevant for you. But now enough of the preliminary information. We hope you enjoy reading and informing.

1. Account in the minus – risks and costs

Many banks advertise an overdraft facility with flexibility and financial freedom. Partly this is true, because an overdraft facility on the current account makes it possible to overdraw the account up to a fixed amount in case of financial bottlenecks. However, you should think carefully in advance whether you really need an overdraft facility and up to what amount. Because an overdraft facility can tempt you to spend more money than you actually have. Thus, an overdraft facility on one's current account increasingly increases the risk of debt.

Certainly, there are sometimes situations in which it is unavoidable to go into the red with the account. This is the case, for example, when the salary is late and urgent bills must be paid on time. In such situations, you should make sure that the account is quickly back in the plus.

This will ensure that it does not become the norm. In addition, one keeps the costs low, which arise, if the account is in the minus. But how high are the costs exactly and what should you absolutely pay attention to?

These costs arise when the account is in the minus:

In order to be able to keep the account in the minus, one needs an overdraft facility. As soon as you use the overdraft facility, the bank charges so-called overdraft interest. The amount of the overdraft interest varies considerably from bank to bank. Currently, the cheapest provider charges 6.5 percent overdraft interest per year and the most expensive provider charges 17 percent overdraft interest per year. These interest rates do not only sound very high, they are also very high. The overdraft facility is therefore one of the most expensive loans that you can use. The good thing about this is, however, that costs are only incurred if you are in the red with your account. If the account is in the plus, the bank does not charge any fees. For better perception about the amount we have prepared an example:

Example of costs: paul has been with his account for 90 days with 2.000 euros in the red. The overdraft interest rate of his bank is 14 percent per year.

Calculation of costs = period used × amount used × overdraft interest rate ÷ (days per year × 100)
calculation of the costs = 90 × 2.000 × 14 ÷ 36.500
result of the costs = 69,04 euro

Paul has to pay 69,04 euro for using the overdraft facility.

This example shows very clearly what costs actually arise when the account is in the red. If paul does not change the current situation, he would have to pay around 280 euros in overdraft interest per year. In addition, there is no monthly installment to repay with the overdraft loan. Each customer of the bank is therefore responsible for minimizing the minus amount on the account.

If one does not create that, one is caught in the dispo trap and it develops permanently new costs. So what can you do to prevent it from happening in the first place or if you can't manage to balance the account on your own anymore? This is exactly what you will learn in the next section.

2. Account in the minus – 3 possibilities to balance the current account

In order to prevent the risk of indebtedness at an early stage with the overdraft facility, we recommend a maximum overdraft amount of 500 euros. This way you can bridge financial bottlenecks and do not run the risk of overdrawing your account too much. If it still happened, there are three clever ways out of the minus.

Balance your current account with a cheap installment loan

The first and best option when the account is in the negative is to take out an installment loan. Installment loans are much cheaper than overdraft facilities. Currently you can get favorable installment loans under 4 percent interest per year. In addition, one pays with an installment credit a fixed monthly credit rate. This reduces the debt month by month until the loan is repaid in full.

However, the amount of the installment loan should not be calculated too tightly. We recommend that you calculate the current amount of the negative balance on your current account and, if there are any outstanding bills until the next paycheck, add them to it. For example, if the account is credited with 2.000 euros in the negative and still have bills in the amount of 1.000 euro should be paid, one should have an installment loan in the amount of 3.Take out 000 euros. This ensures that the account is not immediately in the minus again. If you proceed as described, this is the optimal solution to balance the account in the long term.

To help you find the best possible installment loan, we have compared numerous providers with each other. Particularly recommendable in this connection is the installment credit of the creditplus bank . Compared to other providers, the installment loan of creditplus bank is particularly favorable with an interest rate starting at 1.99 percent and offers further convincing advantages. For example, once a year there is the possibility to suspend a credit installment. Especially if you have unexpected expenses coming up, this is a good option to give you additional financial leeway.

Also very pleasing is that you can arrange the installment loan of creditplus bank very flexible. You can, for example, a loan amount of 1.000 to 100.Choose 000 euro. In addition, the individual choice of the loan term between 12 and 120 months gives you the opportunity to adjust the amount of the monthly loan installment ideally to your needs. As you see, the installment credit of the creditplus bank is a very worthwhile offer that convinces both with attractive conditions and with many advantages. No wonder, then, that the installment loan of creditplus bank has already been named test winner several times. Secure also you now the favorable installment credit of the creditplus bank, if your account is in the minus.