Many people do not have a financial cushion to fall back on for unplanned expenses. Some even have to borrow money more often. Banks are not the only lenders.
Whether it’s repairs to your house or car, broken household appliances or outstanding veterinary bills – many people in Germany have had to borrow money for such expenses in the past two years.
A quarter (25 percent) of the adults surveyed by YouGov for the direct bank Barclays in 2027 did not have enough buffer to bridge a financial bottleneck from their own resources.
For 40 percent of those who needed a loan in the short term, it was a one-off event in the past 24 months. 39 percent had to borrow money two to three times, 16 percent up to five times or more often. In most cases (29 percent) the amounts involved were between 1,001 euros and 5,000 euros. A quarter (24 percent) of those affected borrowed between 501 and 1,000 euros to bridge a financial shortfall.
Many borrow money from family and friends
Those who needed additional liquidity mostly resorted to offers from banks (40 percent). A third of those affected (33 percent) borrowed money from family members, 13 percent turned to friends. Where people borrow money depends primarily on the amount, explained Barclays based on survey data collected in mid-May: For amounts of up to 1,000 euros, the majority preferred to turn to family and friends, and for amounts above that, financial service providers were the preferred source at 62 percent.
“The results clearly show that it is becoming increasingly important for consumers to cover financial bottlenecks quickly and without red tape,” said Tobias Grieß, head of private customer services at Barclays in Germany, summing up the results of the survey. “Many people do not want to ask friends or family for money, but at the same time are afraid of the effort of going to a bank. That is why there are financial instruments such as overdrafts or credit cards that customers can use to borrow money at short notice at any time.”
However, consumer advocates always recommend taking out an installment loan rather than overdrawing your current account. This is because overdraft interest rates are usually much higher than the interest rates for an installment loan. So if you are in the red for a longer period with a large amount in your account, other options can be much cheaper.
Source: Stern
