The €500 Mistake: What Your Overdraft Really Costs
70% of Germans don't know their overdraft interest rate. This costs them hundreds of euros every year — often without realizing it.
What Is the Overdraft (Dispo)?
The Dispositionskredit (Dispo) is an overdraft credit on your Girokonto. You can spend more than you have — up to a certain limit.
| Sounds Like | Actually Is |
|---|---|
| "Convenient cushion" | One of the most expensive loans ever |
| "Flexible" | Debts that grow quickly |
| "Small amount" | €500 Dispo = €50-80/year in interest |
The Numbers
| Statistic | Value |
|---|---|
| Average Dispo rate | 10.76% |
| Highest Dispo rates | Up to 17% |
| Germans who don't know their rate | 70% |
| 18-25 year olds who overdrew last year | 45% |
What Dispo Really Costs You
Example: €500 Permanent Overdraft
| Interest Rate | Interest Cost Per Year |
|---|---|
| 10% | €50 |
| 12% | €60 |
| 15% | €75 |
| 17% | €85 |
Example: €2,000 Permanent Overdraft
| Interest Rate | Interest Cost Per Year |
|---|---|
| 10% | €200 |
| 12% | €240 |
| 15% | €300 |
| 17% | €340 |
Dispo interest is often deducted quarterly. You don't notice you're losing money every month until you read your statement carefully.
Why Dispo Is So Dangerous
1. Psychology: "It's My Money"
When the account shows €0, it doesn't feel like debt. But at -€500, you owe the bank money.
2. No Pressure to Repay
Unlike an installment loan, there's no fixed repayment schedule. You can stay in overdraft forever — and pay interest forever.
3. The Vicious Cycle
Start of month: -€500 in overdraft
↓
Salary arrives: Now at €0 (or slightly positive)
↓
Expenses during month: Back in overdraft
↓
Interest deduction: Even deeper in negative
↓
Repeat...
Recognizing the Dispo Trap: Self-Test
| Question | Your Sign |
|---|---|
| Are you regularly in the negative before month's end? | ⚠️ |
| Does it take several months to get out of overdraft? | ⚠️ |
| Don't you know exactly what your Dispo rate is? | ⚠️ |
| Do you use overdraft for regular expenses, not just emergencies? | ⚠️ |
| Has your overdraft limit increased in recent years? | ⚠️ |
2+ checkmarks: You're in the Dispo trap
Getting Out of Overdraft: 4 Strategies
Strategy 1: Refinance to Installment Loan
For whom: Dispo > €1,000, quick repayment not possible
| Dispo | Installment Loan |
|---|---|
| 10-17% interest | 4-8% interest |
| No fixed repayment | Clear payment schedule |
| Can last forever | End in sight |
Calculation: €2,000 Dispo at 12% = €240/year interest €2,000 installment loan at 6% over 12 months ≈ €65 interest
Don't take an installment loan and then use the overdraft again! That makes everything worse.
Strategy 2: Shock Therapy
For whom: Dispo under €500, quick solution possible
- Stop all unnecessary expenses for 1-2 months
- Put everything toward overdraft payoff
- Immediately start building emergency fund
Strategy 3: Automatic Repayment
For whom: Dispo €500-2,000, regular income
- Set up automatic transfer: e.g., €100/month to Girokonto (above normal needs)
- Overdraft melts automatically
- Once at €0: redirect transfer to Tagesgeld → emergency fund
Strategy 4: Second Account
For whom: Those who don't trust themselves
- Open new Girokonto without overdraft
- Redirect salary there
- Transfer only fixed amount to old account
- Gradually pay off old account
Reducing Your Overdraft Limit
After paying off: Ask to reduce the limit!
| Current Limit | New Limit | Why |
|---|---|---|
| €3,000 | €500 | Less temptation |
| €2,000 | €0 | Overdraft completely impossible |
How to do it:
- Contact bank (online, phone, branch)
- Request Dispo limit reduction
- Confirm
Avoiding Overdraft: Long-term Solutions
1. Build Emergency Fund
Goal: 3-6 months of expenses in Tagesgeld. Then you don't need overdraft.
2. Budget with Buffer
Plan 10% buffer into your monthly budget. This absorbs fluctuations.
3. "Fake Month End"
Act as if the month ends on the 25th. Then salary is already there before you're "broke."
4. Two-Account System
- Account 1: Fixed costs (rent, insurance) — automatic debits
- Account 2: Variable budget — what's left over
FAQ
How do I find out my Dispo rate? Online banking → Account details, or bank's price list, or just call them.
Does Dispo hurt my Schufa? Usage itself not directly. But: permanent overdraft can be seen as a sign of liquidity problems.
Should I cancel Dispo completely? Can make sense if you can't control yourself. But: a small buffer (€500) for real emergencies won't hurt if you don't use it.
Key Numbers
- 10.76% average Dispo rate in Germany
- 17% maximum Dispo rate at some banks
- 70% don't know their rate
- 45% of 18-25 year olds have overdrafted
- 4-8% installment loan rates (for comparison)
What to Do Now
- Find out your rate — Right now, takes 2 minutes
- Check Dispo status — How often are you in negative?
- Choose strategy — Refinance, shock therapy, or automatic repayment
- Start building emergency fund — Prevents future overdraft use
- Reduce Dispo limit — After payoff, less temptation