German banks hike interest rates on overdrafts
Consumer groups are calling for an overdraft interest rate cap following a report showing how rates have risen sharply.
A new analysis finds many German banks, including some of the country’s biggest, have raised their already high interest rates for people who go overdrawn.
Financial portal biallo.de finds that around a quarter of Germany’s 1,167 financial institutions have raised their rates on overdraft facilities from an average of 9.99 percent to an average of 10.07 percent.
READ ALSO: How the cost of living crisis is affecting everyday life in Germany
But that average masks the much higher rates some big banks are charging. Deutsche Bank has raised their overdraft interest rate to 11.15 percent, while Targobank has set it at 13.12 percent. If a customer exceeds their overdraft limit, they can expect interest rates of 17 percent or higher.
Given the current cost of living crisis, consumer groups are calling on the government to intervene, pointing to research that 40 percent of people in Germany don’t have adequate savings and negative Schufa credit reports are up by 20 percent since last year.
“It doesn’t just affect the poor, but increasingly broad sections of the population,” Andrea Heyer of the Saxony Consumer Centre told Focus Magazine. “A legal cap on this rate has to be put on the agenda.”
The Greens and Social Democrats currently advocate a ten percent overdraft rate cap, although the liberal Free Democrats appear to be lukewarm to the idea.
READ ALSO: Why German bank customers could soon pay less for their account
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A new analysis finds many German banks, including some of the country’s biggest, have raised their already high interest rates for people who go overdrawn.
Financial portal biallo.de finds that around a quarter of Germany’s 1,167 financial institutions have raised their rates on overdraft facilities from an average of 9.99 percent to an average of 10.07 percent.
READ ALSO: How the cost of living crisis is affecting everyday life in Germany
But that average masks the much higher rates some big banks are charging. Deutsche Bank has raised their overdraft interest rate to 11.15 percent, while Targobank has set it at 13.12 percent. If a customer exceeds their overdraft limit, they can expect interest rates of 17 percent or higher.
Given the current cost of living crisis, consumer groups are calling on the government to intervene, pointing to research that 40 percent of people in Germany don’t have adequate savings and negative Schufa credit reports are up by 20 percent since last year.
“It doesn’t just affect the poor, but increasingly broad sections of the population,” Andrea Heyer of the Saxony Consumer Centre told Focus Magazine. “A legal cap on this rate has to be put on the agenda.”
The Greens and Social Democrats currently advocate a ten percent overdraft rate cap, although the liberal Free Democrats appear to be lukewarm to the idea.
READ ALSO: Why German bank customers could soon pay less for their account
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