Between 2012 and 2013, 35% of Dutch households were red at least once, according to figures from the Authority for Consumers and Markets. At the end of last year, the total amount that the Dutch were in the negative was no less than 12 billion USD. Being in the red is actually too easy. You do not have to make any arrangements. For extra financial space, you only need to go over the amount available in your current account. That’s right where the danger lies. Because a negative balance entails high interest costs.
High interest costs are overdrawn
Too many people are unaware of the high interest that must be paid to the bank before overdraft. Interest rates from 11% to almost 14%, the maximum interest that can be charged, are no exceptions. This interest is considerably higher than the average interest you pay for a loan. Because that is temporarily overdrawn on your current account, of course: a form of borrowing money.
Alternative form of money lending
In short, being overdone is a waste of your money. There are plenty of alternatives, with which you can obtain extra financial space in a responsible and cheaper way. For example, a revolving credit or a personal loan is already available at an interest rate of 4.6%. Of course, the actual interest depends on your personal situation. But that means that compared to up to $ 2,000 overdraft at Litebank you can be almost 10% cheaper.
Avoid standing red
Before taking out a loan, compare different loans and interest costs. That is the beginning of responsible lending. But realize: borrowing money always costs money. Another tip with regard to overdraft is therefore obvious: avoid overdraft. Start keeping a household booklet today. This allows you to detect and cut unnecessarily high expenditure. Are you already in the red? Then try to redeem this amount. Because saving currently yields less than overdraft, you could use your savings to redeem your negative balance and avoid overdraft in the future.