Debt restructuring by consolidating overdrafts and credit cards: Reduce interest burden by up to 70 percent
11 Jul 2025
6
Minutes
Katrin Straub
CEO at nextsure
Every month in overdraft costs you real money, often with interest rates of over twelve percent. Consolidating your overdraft and credit card with a debt restructuring can drastically reduce your monthly burden and give you back financial control. Discover how you can save hundreds of euros per year with a single, manageable installment.
The topic in brief and concise terms
A debt consolidation combines expensive overdraft and credit card debts (often over 12% interest) into an affordable installment loan (often under 7% interest).
By consolidating multiple loans into a single one, you improve your financial overview and your credit score.
When applying for a loan, select the purpose "debt restructuring" to increase your chances of approval and favourable terms.
Analyze the cost trap: Quantify interest burden from overdraft and credit card
The constant use of the overdraft facility is one of the most expensive forms of financing for consumers in Germany. Banks charge an average interest rate of 11.19 percent for overdrafts, with some institutions even charging up to 16 percent. An example calculation illustrates this: With a permanent overdraft of 3,000 euros at twelve percent interest, pure interest costs amount to 360 euros per year. The situation is similar with credit card debts, whose instalment payment function often comes with interest rates of over 15 percent. Many consumers underestimate that after just three months in overdraft, refinancing becomes financially sensible. Replacing the expensive overdraft credit is the first step towards financial relief. These high costs often lead to a debt spiral, as paying off the debt is made more difficult by the interest burden.
Initiating strategic debt relief: Leveraging the benefits of consolidation
Restructuring to consolidate overdrafts and credit cards replaces multiple expensive loans with a single loan offering significantly better terms. Instead of paying an average of twelve per cent for the overdraft, you often pay interest rates between four and seven per cent for an instalment loan. With a debt sum of €5,000, a reduction in interest from twelve to six per cent means an annual saving of €300. The greatest advantage is the ability to plan: a fixed rate, a fixed term, and a clear end to the debt. This not only improves the overview but also positively impacts your credit score, as a single instalment loan is rated better than multiple open credit lines. With a restructuring loan, you can strategically reduce your monthly burden and regain control. The next step is the concrete implementation of this plan.
Five steps to successful refinancing
A structured process is the key to success when it comes to debt restructuring. Follow these five steps to consolidate your debts efficiently:
Determine your financial status: List all debts from overdrafts and credit cards. Add up the outstanding amounts to determine the required loan sum of at least €2,000.
Create a household budget: Compare your monthly income and expenses. A clear household budget for the loan application shows you what instalments you can afford.
Compare loan offers: Obtain several quotes for an instalment loan. Pay attention to the effective annual interest rate and select "debt restructuring" or "account balancing" as the purpose.
Conclude the loan agreement: After the new bank's approval and signing the contract digitally or by post, the loan amount will be disbursed.
Repay old debts: Transfer the money immediately to your current account and credit card accounts to settle them. Then, cancel the credit cards and reduce your overdraft limit to zero.
Once the debt restructuring has been completed, it is important to continue strengthening your creditworthiness.
Optimize creditworthiness and benefit from better terms in the long term
A successful debt restructuring is a strong signal of your creditworthiness. By consolidating multiple lines of credit into a single instalment loan, your Schufa score often improves within six months. A single, reliably serviced loan is rated more positively by Schufa than an exhausted overdraft and multiple open credit card balances. This opens up access to cheaper loans in the future, as banks reward you with a better score and lower interest rates. Check your free Schufa self-disclosure annually for erroneous entries to keep your profile clean. A clear financial overview through debt restructuring is the basis for financial stability. To maintain this status, you should know and avoid typical sources of errors.
Leverage expert knowledge: Legal pitfalls and design tips
Das Bürgerliche Gesetzbuch (BGB) stärkt Ihre Rechte als Verbraucher bei einer Umschuldung erheblich. Ein zentraler Punkt ist das Recht auf vorzeitige Rückzahlung, geregelt in § 502 BGB. You can repay a consumer credit at any time, in part or in full, ahead of schedule. The bank can only demand a clearly defined early repayment penalty for this: a maximum of one percent of the remaining debt. If the remaining term is less than twelve months, the compensation even decreases to 0.5 percent. Our expert tip: Make sure that the new loan agreement stipulates free extra repayments of at least five percent per year. This gives you the flexibility to become debt-free faster with unexpected income. A long loan term does indeed secure low instalments, but can be shortened with extra repayments. This ensures your long-term financial health.
Safeguard financial sovereignty permanently
After successful debt restructuring, the financial consolidation phase begins. The goal is to never fall into the high-interest trap again. The first step is to build an emergency fund of at least three net monthly salaries in a separate savings account. This buffer covers unforeseen expenses like car repairs, without the need to dip into your overdraft again. Reduce your overdraft limit at the bank to a minimum of 500 Euros to resist temptation. A digital budget book helps you to permanently control your expenses and save at least ten percent of your net income each month. Our independent advice supports you in sustainably organizing your finances and finding the right insurance strategies. Request an individual risk analysis now: Have your insurance situation checked for free and receive specific optimization suggestions.
More useful links
The Deutsche Bundesbank provides detailed statistics on interest rates and yields for consumer loans.
Statista offers a study on monthly overdraft interest rates in Germany.
The Consumer Advice Centre provides comprehensive information on loans and credits and offers tips on saving when borrowing money.
Wikipedia offers an informative article on the topic of debt restructuring.
Creditreform publishes the current Debtor Atlas Germany.
The KfW provides information on its funding programmes in the area of domestic promotion.
The Banking Association explains what creditworthiness means and how the assessment works for consumers.
Stiftung Warentest (Test.de) provides an article about the best loans for consumers.
FAQ
When does it make sense to refinance an overdraft and credit card?
A debt restructuring is generally advisable if you're likely to need more than three months to balance your account and credit cards. The interest savings from a personal loan far exceed the minimal effort involved.
What documents do I need for a debt restructuring?
You typically need the last three payslips, your bank statements, a list of debts to be settled (overdraft balance, credit card statements), and a valid identification document.
Are there any costs associated with repaying the overdraft?
No, there is no prepayment penalty for paying off an overdraft or credit card debt. You can settle these debts at any time in full without any additional fees.
What happens to my overdraft limit and credit cards after refinancing?
After settling the debts with the new loan, you should reduce your overdraft limit at the bank to a minimum (e.g., 500 Euros) and cancel any credit cards you no longer need to avoid falling into debt again.
Can I also refinance if my credit score is not perfect?
Yes, refinancing is often possible even with an average Schufa score. Banks view it positively that you actively want to organize your finances. A stable income is a decisive factor in this regard.
How long does refinancing take?
The entire process from application to disbursement of funds and repayment of existing debts can often be completed within three to five working days with digital providers.
