A current account on the credit balance is called a credit account. This credit account has the advantage over a traditional checking account that you can only use money that you really have on your account. Thus, one can not fall into the debt trap of an overdraft or similar. However, you can enjoy all the other benefits of a checking account, such as being able to make transfers, withdraw cash, or redeem direct debits.
Even with a negative credit bureau entry you can open a credit account. Therefore, it is often referred to as “everyone’s account”. Previous financial burdens will usually be ignored when opening a credit account.
Under what conditions can a credit account be opened?
As a German citizen you have, by law, the right to a bank account in Germany and with a credit account banks have found the perfect solution for financial risk customers, therefore, as already mentioned, a positive credit bureau information is not compelled to exist to set up a credit account,
Similarly, no particular value is placed on a fixed income, so unemployed, or young people (with the consent of the parent or guardian) can open a credit account.
How does a credit account work?
In order to be able to carry out financial transactions or to be able to withdraw money, at least the desired amount must be present in the account. If there is not enough money, the transaction will not be executed. This often involves processing fees. If there is enough money in the account, then the credit account can be used like any normal checking account.
Credit accounts for children and adolescents
Most banks also offer children and adolescents a credit balance. These must be offered free of charge for under 18s. However, the written consent of a parent or guardian is required to open this form of account. There are different models for teens and children.
There are banks, which have credit accounts, which develop almost with the children and automatically turn over time from a savings account to a checking account. The advantage for the banks is that they can directly bind their young customers to their bank from an early age.
What are the costs for a credit account?
The resulting costs depend, as with a normal checking account, from the selected bank. If a free checking account is offered, this does not automatically mean that even a credit account is offered free of charge at the same bank. Apart from that, fees are charged for a wide variety of services.
For example, fees may be charged for the account management itself or, for example, for withdrawing money from third-party ATMs. Even the deposit of small change is often, not too tight, calculated.
Tables are circulated on the Internet in which the proportionate fees for the respective services of the most common credit institutions are clearly listed. This facilitates the quick comparison between the providers.
Relationships between a credit account and a R account
R account stands for seizure protection account, this is a special form of the credit account. With this account model, seizure protection is automatically granted even without the intervention of a court. Any giro account holder can request conversion to a P account. After successful conversion one has as an account owner a certain attachment-free amount, which is to secure the existence even during a running insolvency procedure.
When can such an account be denied or terminated?
Despite the legal obligation, which states that the banks must grant each German citizen a current account, there are some exceptions. For example, credit institutions are not obliged to give you a credit account if you have been liable to prosecution in the past, have committed an offense that has had a negative impact on the bank, if you owe money to the bank, or if you already have a bank account with another bank.
The bank can cancel you if you have used the account for illegal purposes or if you have given false information when opening the account.
How can I open a credit account?
Such an account can be opened at any German bank of his confidence. It basically acts like a giro account opening. This requires an appointment at the selected bank. At this appointment you have to give details of his person, his financial status and similar and sign contracts. In addition, you get some interesting tips on account management and online banking at hand.
After verifying the specified data (this may take a few days) you will receive a confirmation, including the new account details sent by mail. For security reasons, the new bank card will be sent in a separate letter.
Tips for opening a credit account
Discuss what matters in terms of bank accounts is important
First of all, the key question of whether such an account is the right model or whether a normal checking account is more useful should be discussed. For this you should ask yourself what you want to use the account in the future and what benefits are in the foreground.
You should also ask yourself the following questions:
Is a free or at least low-cost withdrawal at the foreign ATM or even abroad important? Will you use the account as a kind of savings account, so high interest rates on the balance important? Is a P-account required?
Although everyone can open a credit account, this does not mean that this must also be offered free of charge. This can result in quarterly fees for the account management. Fees may also be charged for withdrawing money from third-party ATMs and depositing small change. Therefore, it is advisable to compare the condition of the banks in advance.
Also, the interest offered, for the account balance should be included in the comparison. An Excel spreadsheet can be a great help here for a better overview.
Apply for pre-paid credit cards
Nowadays you need more and more credit cards. Especially when shopping online or to reserve a hotel, they are practically indispensable. Since credit cards, again name says, are actually there, so that one can resort to smaller sums, in the form of a credit, short term, credit cards can not be combined with a credit account.
This is where a pre-paid credit card can help. To be able to use it, it must be charged manually. So you can not fall into the debt trap despite a credit card.
The right preparation for the consultation at the bank
Once the correct bank has been found and the deadline for the selected bank has been established to create an account, it is important to check whether the ID card is still valid and, if applicable, apply for a new one.
Even though a credit account may not be denied because of a negative credit bureau entry, it is still advisable to review it to prevent a false statement, as this may be a reason for cancellation or later termination. One should also prepare a folder with salary statements, payroll or the like, if available, as this could be of interest to the banks.
In particular, since opening an account involves a lot of bureaucracy, a structured approach shortens the waiting time for bank confirmation and paves the way for a relaxed consultation.
Only talking people can be helped
If you have found a suitable offer, but a condition does not match your own wish list, it often helps to talk to the consultant about it, then any compromises can be found.
In general, you should sign any contracts with which you do not completely agree and in case of doubt prefer to get another offer. The egg-laying Wollmilchsau will be hard to find, so it can also help to keep your own wishes realistic.