Debt consolidation with overdraft and credit card combined: reduce interest charges by up to 70 per cent
11/07/2025
6
Minutes
Katrin Straub
Managing Director at nextsure
Every month in your overdraft costs you real money, often at interest rates of over 12 per cent. Refinancing by combining your overdraft and credit card can drastically reduce your monthly outgoings and give you back financial control. Discover how you can save hundreds of euros a year with a single, predictable monthly payment.
The topic in brief and concise terms
Refinancing bundles expensive overdraft and credit card debts (often over 12% interest) into a low-cost instalment loan (often under 7% interest).
By consolidating several loans into one, you improve your financial overview and your SCHUFA score.
When applying for a loan, select the purpose ‘debt consolidation’ to increase your chances of approval and favourable terms.
Analysing the cost trap: quantifying interest charges on overdrafts and credit cards
Continual use of an overdraft is one of the most expensive forms of financing for consumers in Germany. Banks charge an average of 11.19 per cent interest for overdrafts, with some institutions charging as much as 16 per cent. An example makes this clear: with a permanent overdraft of €3,000 at 12 per cent interest, €360 a year is incurred in pure interest costs. The same applies to credit card debt, whose instalment feature often comes with interest rates of more than 15 per cent. Many consumers underestimate that after just three months in the overdraft, refinancing is already financially worthwhile. Paying off the expensive overdraft is the first step towards financial relief. These high costs often lead to a debt spiral, as repayment is made more difficult by the interest burden.
Initiate strategic debt reduction: harness the benefits of consolidation
Debt consolidation by combining overdraft and credit card replaces several expensive loans with a single loan on significantly better terms. Instead of an average of twelve per cent for the overdraft, you often pay only interest rates of between four and seven per cent for an instalment loan. With a debt amount of €5,000, a reduction in interest from twelve to six per cent means annual savings of €300. The biggest advantage is predictability: a fixed instalment, a fixed term and a clear end to the debt. This not only improves clarity, but also has a positive effect on your Schufa score, as a single instalment loan is rated better than several open credit lines. With a debt consolidation loan, you can specifically reduce your monthly repayments and regain control. The next step is to put this plan into practice.
Successful debt restructuring in five steps
A structured process is the key to success when refinancing. With these five steps, you can consolidate your debts efficiently:
Determine your financial status: List all liabilities from your overdraft facility and credit cards. Add up the outstanding amounts to determine the required loan amount of at least EUR 2,000.
Prepare a household budget: Compare your monthly income and expenditure. A clear household budget for the loan application shows you which monthly instalment you can afford.
Compare loan offers: Obtain several quotes for an instalment loan. Pay attention to the effective annual interest rate and select “refinancing” or “account settlement” as the purpose of the loan.
Conclude the loan agreement: Once the new bank has approved it and the contract has been signed digitally or by post, the loan amount will be paid out.
Pay off old debts: Transfer the money immediately to your current account and credit card accounts to clear them. Then cancel the credit cards and reduce your overdraft limit to zero.
Once the refinancing has been completed, the next step is to continue strengthening your creditworthiness.
Optimise your credit rating and benefit from better terms in the long term
A successful debt consolidation is a strong signal of your creditworthiness. By combining several credit lines into a single instalment loan, your Schufa score often improves within as little as six months. A single loan that is reliably serviced is assessed more positively by Schufa than an overdrawn overdraft and several outstanding credit card balances. This opens the door to more favourable loans in the future, as banks reward a better score with lower interest rates. Check your free Schufa self-assessment once a year for incorrect entries to keep your profile clean. A clear financial overview through debt consolidation is the basis for financial stability. To maintain this status, you should know and avoid typical sources of error.
Leveraging expert knowledge: legal pitfalls and design tips
The German Civil Code (BGB) significantly strengthens your rights as a consumer when refinancing a loan. A key point is the right to early repayment, governed by Section 502 of the BGB. You can redeem an instalment loan in full or in part at any time ahead of schedule. The bank may only charge a clearly defined early repayment fee: a maximum of one per cent of the outstanding balance. If the remaining term is less than twelve months, the fee falls to 0.5 per cent. Our expert tip: Make sure that the new loan agreement includes free special repayments of at least five per cent per year. This gives you the flexibility to become debt-free more quickly when unexpected income comes in. A long loan term does secure low instalments, but it can be shortened through special repayments. This helps you secure long-term financial health.
Secure financial sovereignty for the long term
After the successful debt restructuring, the phase of financial consolidation begins. The aim is to never again fall into the high-interest trap. The first step is to build up an emergency fund of at least three net monthly salaries in a separate instant access savings account. This buffer absorbs unforeseen expenses such as car repairs without you having to draw on your overdraft again. Reduce your overdraft limit with the bank to a minimum of €500 to resist temptation. A digital household budget book helps you keep your expenses under control on a permanent basis and save at least ten per cent of your net income each month. Our independent advice supports you in organising your finances sustainably and finding the right protection strategies. Request an individual risk analysis now: Have your insurance situation checked free of charge and receive concrete suggestions for optimisation.
More useful links
The Deutsche Bundesbank provides detailed statistics on interest rates and yields for consumer loans.
Statista offers a study on monthly interest rates for overdrafts in Germany.
The Consumer Advice Centre provides comprehensive information on loans and borrowing and gives tips on saving money when borrowing.
Wikipedia offers an informative article on debt restructuring.
Creditreform publishes the latest German Debtor Atlas.
The KfW provides information on its funding programmes in the area of domestic funding.
The German Banking Association explains what creditworthiness means and how the assessment works for consumers.
Stiftung Warentest (Test.de) offers an article about the best loans for consumers.
FAQ
From what point does it make sense to consolidate an overdraft and credit card debt?
Debt consolidation is generally worthwhile if you are likely to need more than three months to clear your account and credit cards. The interest savings from an instalment loan far outweigh the small amount of effort involved.
What documents do I need for refinancing?
You usually need the last three payslips, your bank statements, a list of the debts to be settled (overdraft balance, credit card statements) and a valid identity document.
Are there any costs for repaying the overdraft?
No, there is no early repayment charge for repaying an overdraft facility or credit card debts. You can settle these debts in full at any time and without additional fees.
What happens to my overdraft limit and credit cards after the debt restructuring?
After you have settled the debts with the new loan, you should reduce your overdraft limit at the bank to a minimum (e.g. 500 euros) and cancel the credit cards you no longer need in order to avoid getting into debt again.
Can I still refinance if my SCHUFA score isn’t perfect?
Yes, refinancing is often possible even with an average SCHUFA score. Banks view it positively that you want to actively organise your finances. A stable income is a decisive factor here.
How long does a debt restructuring take?
The entire process, from application to disbursement of the money and repayment of the existing debt, can often be completed by digital providers within three to five working days.
