Berlin The consumer protection ministers of the federal states are calling for a legal interest rate limit for overdraft facilities. This should be in the range of five to a maximum of eight percentage points above the base rate of the European Central Bank (ECB). This interest rate, at which banks can borrow money from the ECB, is currently four percent.
Banks grant their customers overdraft facilities up to a certain limit if their current account is exhausted. The relatively expensive overdraft facilities have increasingly come under the scrutiny of consumer advocates in recent months.
Rising living costs meant that at the end of last year every seventh consumer used their overdraft facility. This was the result of a representative survey by the Federal Association of Consumer Organizations (vzbv).
It is becoming more and more expensive to use. According to a study by Stiftung Warentest, the average interest rate rose from 9.43 percent to 11.22 percent last year. The level has not been higher for ten years.
Dispo credit is often significantly more expensive than installment credit for account balancing
However, the results differ significantly among the 1127 banks examined. The cheapest bank in Germany does not charge any overdraft interest in one of its account models, the most expensive, however, 16.26 percent.
“The overdraft facility is only the right financing instrument for short-term bridging of a financial bottleneck,” says Oliver Maier, managing director of the comparison portal Verivox Finanzvergleich. Anyone whose account balance is permanently in the red should look for cheaper alternatives. By rescheduling to an installment loan, those affected would save several 100 euros.
Verivox makes the following calculation for the Handelsblatt: If you have an account balance of minus 5000 euros and pay off this sum over three years, you would pay a total of 866 euros at an average overdraft rate of 11.22 percent.
On the other hand, if you take out an installment loan for the account balance for the 5,000 euros, you only pay an average of 6.6 percent interest. In this example, the customer would save 357 euros, compared to the most expensive overdraft facility, the saving would be 760 euros.
In order to effectively protect consumers from over-indebtedness, the ministers are not only advocating an overdraft cap. Consumers should receive an initial offer of advice from banks if an overdraft has been used without interruption over a period of three months and on average for an amount that exceeds 60 percent of the agreed maximum amount of the overdraft facility.
According to the applicable law, banks have so far been obliged to offer customers advice if the overdraft facility has been used continuously over a period of six months and on average for an amount that exceeds 75 percent of the agreed maximum amount.
Bundestag has rejected the left-wing proposal for a cap on the overdraft facility
It remains to be seen how the federal government will react to the initiative by the consumer protection ministers of the federal states. The Bundestag has rejected an initiative by the left for a legal cap on overdraft interest.
In the past legislative period, the overdraft interest limit failed due to resistance from the Union. The SPD is considered a supporter. The SPD member of the Bundestag, Frauke Heiligenstadt, is in favor of an overdraft interest cap. Overdraft facilities are the “quick route into the debt trap”.
Green politician Stefan Schmidt sees it similarly: “We Greens have been calling for years to put a stop to excessive interest rates for overdraft facilities.” However, the FDP is considered to be the brakeman in the coalition. The liberals rely on financial education and see an intervention in the overdraft interest as an intervention in free competition and the autonomy of the banks.
It remains to be seen whether the officials of the Federal Ministry of Finance led by Christian Lindner (FDP) will come to a different conclusion in the test order.
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