overdraft interest rates switzerland
Loans & Mortgages

Swiss Bank Overdraft Interest Rates Explained

February 1, 2024 - Benjamin Manz

How much interest do Swiss banks charge you if your account gets overdrawn? Find useful information and a comparison of Swiss bank interest rates for overdrafts in this guide.

Overdraft interest is a fee you have to pay to your bank when you spend more money than is actually available in your account. This guide from moneyland.ch answers the most important questions about bank account overdrafts in Switzerland, and compares the overdraft interest rates across Swiss banks.

When do I have to pay overdraft interest for my private account?

Depending on the bank and account you use, it is possible for certain kinds of transactions to be debited from your account even if you do not have enough money in your account to cover them. These overdrafts enable payments to be made, even if it results in a negative account balance.

Examples of transactions that could result in a negative private account balance include:

  • Fees charged by your bank
  • Payments you make with your debit card
  • Bank transfers
  • Direct debits
  • Standing orders

Typically, paying with debit cards is only possible if you have enough money on your account, or if your account’s agreement allows for overdrafts. Transfers, direct debits, and standing orders typically are not carried out if your account balance – including a possible limit for overdrafts – is not high enough to cover them. However, overdrafts may still be possible in exceptional cases. A common cause of overdrafts is if you use a credit card from the same bank at which you have your private account, and you have a direct debit order to pay the credit card bill. In this case, most banks will debit the amount you owe even if there is not enough money in your account to cover the bill.

 

Do all Swiss banks allow account overdrafts?

Overdrawing private accounts is not the norm in Switzerland. Normally you can only overdraw accounts at Swiss banks if you have a special agreement that specifically allows for overdrafts. If you have this kind of agreement, then you can overdraw your account within the given limits as needed. Only a few Swiss banks let you overdraw your account without needing a special agreement. Some banks allow overdrafts for some of their accounts of bank packages.

But even if you are not normally able to overdraw your private account, certain kinds of transactions can still result in a negative balance which generates interest charges.

How high are the overdraft interest rates at Swiss banks?

Overdraft interest rates vary between banks. The maximum interest rate that banks can use for overdrafts is specified in the Swiss Consumer Credit Act, and is identical to the highest legal interest rate for Swiss credit cards.

Comparison of interest rates for overdrafts from Swiss private accounts:

Bank Annual interest rate
Migros Bank 8.00%
Berner Kantonalbank 9.00%
Regiobank Solothurn 9.00% (plus 0.25% per quarter)
Banque Cantonale du Jura 9.50%
Glarner Kantonalbank 9.50%
Postfinance 9.50%
Graubündner Kantonalbank 9.75%
Baloise Bank Soba 10.00%
Banque Cantonale de Fribourg 10.00%
Bank WIR 10.00%
Basellandschaftliche Kantonalbank 10.00%
Raiffeisen (Zürich) 10.00%
Schwyzer Kantonalbank 10.00%
Sparkasse Schwyz 10.25%
Banque Cantonale de Genève 11.50%
Bank Cler 11.50%
Credit Agricole Nextbank 11.50%
Basler Kantonalbank 12.00%
Valiant 12.00%
UBS 13.00%

 

How are overdraft interest rates calculated?

As with credit cards, interest rates for overdraft loans are calculated based on the time periods over which you actually carry a negative balance.

For example, if your account has an overdraft interest rate of 10 percent per year and you carry a negative balance of -1000 francs over a total of 30 days out of one year, then you will pay a total of 8.33 francs of overdraft interest. The calculation used this formula: 30 days / 360 days * amount 1000 francs * interest rate 10 percent.

Is an overdraft loan the same thing as a current account loan?

No. The interest rates in the table above apply when you overdraw a private account.

But many Swiss banks also offer current accounts. These accounts are primarily designed for businesses and individuals that make large transactions, or make a high number of transactions. Current accounts often have a line of credit, with a limit agreed upon by the bank and customer. If you have a current account with a line of credit, you can overdraw your account at any time, within the limits of your line of credit.

More on this topic:
Which Swiss banks pay the most interest on savings?
Swiss credit cards: Interest rates and late payment fees compared
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Expert Benjamin Manz
Benjamin Manz is CEO of moneyland.ch and an independent expert on banking and finance.
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