An overdraft is an agreed credit line on your current account in Germany. It lets you spend more than the balance, and the bank charges interest on the amount you use. What it costs depends on the amount, the number of days and your bank’s conditions.
Short answer: Interest on an overdraft follows the debit interest rate in your contract. A simple formula using the amount, the rate and the number of days gives you the order of magnitude. Under section 504 of the German Civil Code (BGB), an agreed overdraft facility counts as a consumer loan. This guide does not state fixed rates, because banks set their own. Last updated: November 2026.
The most important points
- An overdraft is a consumer loan under German law when agreed as a credit line on a current account (section 504 BGB, in German).
- You pay interest only on the amount you actually use, and only for the days you use it.
- Your debit interest rate is in your contract and in your bank’s price and service list.
- Even a small amount can become noticeable over several months.
- If you need the facility long term, compare other credit using the effective annual rate.
How do you calculate interest on an overdraft?
For a rough estimate use this formula: amount used times interest rate times days, divided by 365. Your bank calculates according to your contract, so its statement may differ slightly.
| Amount used | Duration | Interest rate (assumed) | Interest (approx.) |
|---|---|---|---|
| 500 euros | 30 days | 12 percent | 4.93 euros |
| 500 euros | 180 days | 12 percent | 29.59 euros |
| 1,000 euros | 180 days | 12 percent | 59.18 euros |
Assumption: the interest rate is 12 percent per year. The actual rate for your account is in your contract and may differ.
Why does an overdraft often cost more than expected?
An overdraft feels convenient because no new application is needed. At the start of the month, when standing orders and direct debits are paid, a deficit can quickly appear and last for weeks. Each day in the red costs interest. For what protects your account in an enforcement case, see our guide to the 2026 seizure threshold.
Which information can you ask your bank for?
Under section 504 subsection 1 BGB, the bank must inform you at regular intervals about the details set out in Art. 247 § 16 of the Introductory Act to the Civil Code (EGBGB). If the bank raises the debit interest rate or agreed other charges, section 493 subsection 3 BGB applies accordingly. Keep letters about changes to conditions and ask if something is unclear.
When is an overdraft useful and when is it not?
An overdraft can serve as a short-term reserve, for example when a payment arrives late. For ongoing financing it is usually the most expensive option. Whether a personal loan is cheaper depends on the term and the effective annual rate of each offer.
Frequently asked questions
Is an overdraft a loan?
Legally yes, if the bank has agreed the overdraft as a credit line. Section 504 BGB places it under consumer loans, which brings information duties for the bank.
How do I know I am overdrawn?
The account balance shows a minus. Many banks also show the overdraft in their app. Check the balance especially at the start of the month, when standing orders and direct debits are paid.
Do I have to repay the overdraft immediately?
Whether and when the bank demands repayment depends on your contract and the bank’s termination rules. If you cannot repay, contact the bank early, before reminders arrive.
Is a personal loan better than an overdraft?
Only your own figures can answer this. Compare both offers over the term you realistically need, and look at the effective annual rate including all costs.
Why does my bank statement differ from the formula?
The formula is an estimate. The bank also considers value dates, its interest calculation method and charges in your contract. The bank’s statement is decisive for the exact amount.
What to do now
- Check your contract and the price and service list for the debit interest rate on overdrafts.
- Use the formula from this guide to estimate what a typical overdraft costs in your case.
- Set up an account alert in the app or fix a date at the start of each month to check your balance.
- If you need credit long term, compare two offers using the effective annual rate.
Worked example: an overdraft over one month
Assumption: on the 1st of the month your account shows a deficit of 300 euros because rent and insurance are paid. On the 15th your part-time salary arrives and the deficit falls to zero. At 12 percent interest, 14 days cost 300 × 0.12 × 14 / 365 = 1.38 euros. If the deficit lasts 60 days, it costs 300 × 0.12 × 60 / 365 = 5.92 euros.
These sums look small. What matters is that charges listed in your bank’s price and service list can apply on top of interest, so calculate with all items, not only the interest.
Overdraft or personal loan: what to compare
- Term: an overdraft has no fixed repayment schedule, a personal loan does.
- Effective annual rate: compare offers including all costs, not only the nominal rate.
- Flexibility: the overdraft is available when you need it. A loan is paid out and requires fixed instalments.
- Reliability: check whether the bank can change the limit before you rely on it.
If money runs short at the end of the month, a fixed plan helps. A starting point is Budget Planning for Students: A Monthly Plan in 3 Steps, which lets you set fixed costs against the overdraft.
Common mistakes with an overdraft
- Using the overdraft as a permanent buffer for fixed costs that recur every month.
- Not checking the debit interest rate because the overdraft seems minor.
- Filing letters about changed conditions unread.
- Looking only at the balance instead of the total of interest and charges.
Set up alerts and keep track
Many banks offer balance notifications. Set a threshold, for example a small remaining balance, and also check recent transactions. That way you notice an overdraft before it creates costs you did not expect.
What role does the overdraft play in budgeting?
An overdraft is not income. It only shifts spending into the future and makes it more expensive. If you regularly slip into the red, address the cause: high fixed costs, irregular income or payments that are not aligned with payday. A simple one-month overview usually shows quickly where the money goes.
With irregular income from a part-time job or a freelance contract, it helps to move payment dates or align direct debits with payday. Ask your bank whether this is possible. Rescheduling often saves more than any effort to optimise the interest rate.
Related reading
- Geld, Konto und Kredit: Der Überblick für junge Erwachsene
- Pfändungsfreigrenze 2026
- Kontaktlos bezahlen
- Free credit report
Sources: Section 504 BGB, Gesetze im Internet, German text (retrieved November 2026).
Last updated: November 2026. This guide is general information, not individual advice.
