Banks must clearly indicate overdraft

You often pay more than 10 percent overdraft interest for an overdrawn checking account, even at the current low interest rate. However, many bank customers only become painfully aware of this when they look at the account statement. However, credit institutions must clearly inform their customers of the amount of the required overdraft interest, as the Federal Court of Justice has now made clear.

Consumer advocates took legal action against two credit institutions that had not particularly emphasized their overdraft interest in the price list. According to the law, overdraft interest rates would have to be “clearly, unambiguously and conspicuously” in the price information provided by the banks and savings banks, according to the plaintiffs’ argument. On the websites and in the price notices of the defendant banks, however, the overdraft interest could not be distinguished from the other information. The Federal Court of Justice gave the consumer advocates right in both decisions (Az. XI ZR 46/20 and XI ZR 19/20). The overdraft interest must differ from the other fees shown in the price information in such a way that it is clearly visible to consumers, according to the BGH.

Our tip: Overdrafts are flexible and require little effort, but are unnecessarily expensive. An account overdraft of a noteworthy amount is only useful as a bridging measure, for example for short-term financing of unplanned expenses until the next salary is received. Instead of overdrawing your checking account for a longer period of time, it is better to take out an installment loan that you repay in fixed monthly installments. Good news: Cheap installment loans are currently available from around 2 percent borrowing interest.

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