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Should I overdraw my account?

Person mit Münzen in der Hand
How much will an overdraft cost? The bank has offered you a free personal account. Whether or not it really remains free depends entirely on you.
Should I overdraw my account?

How can I keep my account at zero cost?

How much will an overdraft cost? The bank has offered you a free personal account. Whether or not it really remains free depends entirely on you. Free personal accounts with full service packages are available for young people. But they are only free as long as your account balance is positive, i.e. as long as you have money in the bank. If you withdraw more money than you have, your bank balance will turn negative (“go into the red”). That means you are overdrawing your account. You will have to repay the money, of course, and interest. Overdraft interest rates are usually anywhere around 10 per cent. If you withdraw money in excess of your overdraft limit, additional punitive interest will be charged. The total interest load may add up to a stiff 20 per cent.

How to stay on the safe side!

1. Check your account statements regularly and keep an eye on how much you have in your account. 2. Only withdraw cash when you know that there is enough in your account. 3. You can do without an overdraft facility altogether. That way you avoid all risk.

FAQ

If you withdraw or spend more money than is available in your account, you go into the red – you overdraw your account. This means that you borrow money from the bank in the short term, which you have to pay back later.
The bank charges interest on the overdrawn money – so-called overdraft interest. On average, this is around 10% per year. If you exceed your agreed overdraft limit, you may also incur penalty interest.
It is best to check your account balance regularly and only withdraw money when you are sure that you have enough in your account. You can also agree with your bank that your account cannot be overdrawn at all – that way you are on the safe side.
Yes, many banks offer free accounts for young people – but only as long as you stay in credit. As soon as you overdraw your account, interest is charged and the account is no longer free.
A permanently overdrawn account can be expensive and lead to debt. If you notice that you are regularly slipping into the red, you should speak to your bank or seek advice from a debt counselor.

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