Do you need a loan or have you slipped into the overdraft facility? On Thursday, the ECB is likely to raise interest rates further – making your debt more expensive. That is why it is now more important than ever to compare the offers of as many banks as possible.
The European Central Bank (ECB) has already raised the key interest rate twice this year. On October 27, 2022, the central bank of the eurozone will announce whether it will raise it for a third time. Experts expect a further increase of 0.75 percentage points. That would mean that interest rates on overdraft and consumer credit would also increase.
As a result of the turnaround in interest rates, consumer credit and overdraft interest rates have risen by around three percent on average in Germany over the past few months to 6.33 percent in August. A further increase is to be expected. Alexander Artopé, Managing Director of the credit comparison portal Smava, suspects that the interest rates for installment loans “will probably be around the 7 percent mark on average in Germany over the next few months”. However, interest rates are not increasing at the same rate at every bank. “Banks have always charged different interest rates for the same loan. Now there is also the fact that they adjust interest rates differently, often, quickly and significantly,” explains Artopé. Therefore, it is currently more worthwhile than ever to compare the offers of as many banks as possible.
Nine out of ten of the leading direct, neobank and national banks have already raised the interest rates on their overdraft facilities as a result of the increase in key interest rates. This is the result of a long-term study of Smava. In May 2022, the average overdraft rate across Germany was still 9.43 percent. But here, too, a further increase is to be expected: “It currently looks as if the current 5.4 million overdraft users will have to adjust to overdraft interest rates of an average of 12 percent and more in the coming months. This is how much overdraft facilities cost when the key interest rate was 1.25 percent and above the last time in 2011,” explains Artopé. The high overdraft interest rates have been criticized by consumer advocates for years. Artopé therefore recommends: “Anyone who needs more than three months until the account is balanced again is well advised to look for a cheaper alternative such as a consumer loan.”
1. PSD GiroDirekt
With an overdraft interest rate of 6.24 percent, PSD GiroDirekt currently offers a comparatively low overdraft interest rate. In addition, new customers benefit from a free current account, provided that a regular salary is recorded.
2. ING: Current account without a Girocard
The ING currently requires 6.99 percent overdraft interest. Here, new customers benefit from a starting credit of 50 euros if they open an account by October 31, 2022 and pay at least five times within the first four months with the Visa card.
3. 1822 Direct: Classic checking account
The interest rate for the 1822 is currently 7.71 percent. Here, too, there are advantages for new customers: You will receive a one-time credit of 100 euros if you generate/download the opening application by November 7th, 2022 and receive at least 3 monthly salaries totaling 1,000 euros by February 28th, 2023.
More surfing tips:
Higher interest rates and stricter requirements – installment loans are on average 35 percent more expensive than at the beginning of the year
Take advantage of low interest rates – loan rescheduling reduces monthly payments by a good 100 euros
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