The summer vacation is over. The credit card statement arrives. The children have already gone to school. So those costs for school books and so on are also on the way. It may be clear that you will not get there for a while, but how do you solve it? And what is the cheapest way?
If you still have savings on your savings account, the cheapest solution is undoubtedly to use these credits at the moment. However, if this is not the case, it depends on the amount that you are short of.
If we are talking about relatively small amounts, you can just go ‘in the red’ on your current account. Check with your bank how much interest you are charged for this. This is anyway a temporary solution in the very short term. Most banks also require you to be above zero at least once a month. (Some banks only expect a positive balance every three months.) This option is sometimes referred to as an open-ended credit facility and the credit facility is usually around 1,250 euros. You only pay interest on the amount that is actually deducted from you. Nowadays you can expect an interest of around 10.5%.
Another possibility is to repay the negative balance on your credit card in installments instead of in one go. Here again it is very important to check which interest is charged for this. Not all financial institutions allow payment in installments. A realistic interest rate today is 11.80% with an annual variable interest rate.
If we are talking about larger amounts, you can take out a revolving credit. You can find such a credit facility for around 9% (depending on the amount) and sometimes a discount (so a lower interest rate) is granted if you are a homeowner. Always ask for a calculation example to clarify things.
A final solution is an installment loan or personal loan. For larger amounts, this is often interesting because everything is arranged neatly in advance. The interest, the term and the monthly amount. In other words, you know exactly where you stand. That way you can budget easily. Depending on your personal situation, the lack of flexibility can be seen as a disadvantage. After all, you cannot withdraw the repaid capital. Today you will find personal loans with an interest rate of around 5%. Other lenders, however, easily charge 14%. So watch out for so-called strangulation contracts.
It may be clear that borrowing always costs money. Comparing the interest, costs and general terms and conditions of the various financial service providers therefore guarantees money. It is therefore worthwhile to make time for this. On the basis of the above list, first check which option best suits your situation. You can then compare the conditions of different providers for the solution you have chosen via the internet. Visit some comparison sites. This way you get a good idea about the market players. After that you can always visit the websites of the lender itself. Often you just have to click through.