Everyday money · General financial education

Overdraft

A German Dispokredit and a UK overdraft are the same idea: you can spend more than is in the account. Interest is usually charged on the amount you actually use, often more expensive than many other forms of credit.

In more detail

The limit is availability, not free money. Interest typically runs for as long as the account stays below zero, often calculated daily on the amount drawn. The facility may be reduced or withdrawn under the contract's own rules; that is local contract law, not a universal Finmon rule.

Background

Because this is revolving credit, a small amount you keep drawn can charge interest month after month, and the balance does not shrink on its own. An arranged overdraft (German Civil Code section 504) and a tolerated, unarranged overdraft (section 505) are legally different: one is agreed in advance, the other the bank allows without an agreement, usually at an even higher rate and with no right to it. Finmon does not recommend refinancing or a product. Note the amount used and the rate on your statement, and whether you need independent help.

An example

You use £300 of overdraft every month and do not clear it. The £300 remains: interest continues on the amount drawn, not on the unused limit.

A common misconception

Within the limit, an overdraft is a free buffer.

The limit is availability. Interest usually runs on the amount actually drawn.

Source: BaFin · Girokonto und Dispositionskredit. Last reviewed: 2026-10-27. Editorially reviewed on 2026-10-27. Next review 2027-10-27. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.