Banking in Germany is similar to other advanced countries – except that many things are in Germany possible in a more diverse way, cheaper or even free.
Every second German current account is free of charge!
On this page, you will find the most important information on how banking in Germany works. You are welcome to ask your question at the end of the page using the comments feature, if something needs to be clarified.
The current account (in American English “checking account”) is the basic account. If you (want to) live in Germany, then you need this kind of account to receive salary payments or social transfers. Almost every German citizen older than 16 years has one or more current accounts.
Most expenses, such as rent, insurance or taxes, are also paid through this account. One can receive one or more bank cards to the current account in order to be able to pay cashless.
Variants of Current Accounts
The current account is available in different variants depending on the bank:
Current account on prepaid credit basis (Guthabenbasis)
One has to deposit money at the bank before using the account. If the account is empty, one cannot use it. The bank cards will not work in this case.
Current account with overdraft facility (Girokonto mit Dispo)
A credit line is added to the current account. That means that the account also works even if there is no money in it. One receives a loan at the bank and pays interest on the loan. One usually gets this account only if one has a steady income and disposes of a positive credit worthiness assessment (Bonitätsbewertung).
Current account for students
These accounts work just like regular current accounts with or without an overdraft facility. However, they are free at almost any bank.
Business Account (Geschäftskonto)
The current account for entrepreneurs or companies is called “Business Account” and works similar to a current account for private persons, but not all banks offer business accounts. The fees for business accounts are generally higher than for normal current accounts.
Seizure Protection Account (P-Konto, Pfändungsschutzkonto)
This type of account is a current account on a prepaid credit basis, which cannot be distrained by creditors (Gläubiger) or only up to the seizure exemption amount (Pfändungsfreibetrag). For this account, one cannot apply directly. Only existing current accounts can be converted into seizure protection accounts. However, this is only recommended for over-indebted people.
Current account for free or with fees?
The biggest difference between current accounts for many German people is whether a monthly account maintenance fee (Kontoführungsgebühr) applies or not. Whoever looks at the various account offers will find that there is no difference in quality between the two variants.
You can find recommendable current accounts for each usage type in the section “Banks“.
Cards for the current account
Bank card (Debit Card)
A bank card (Bankkarte) is almost standard in a current account. Depending on the issuing bank, this bank card is called Girocard, Sparkassen Card, VR Card, V Pay Card, Maestro Card, or the like.
It is always a debit card. Performed transactions with the card will be debited immediately from the current account.
Formerly, the term EC-card was common. Nowadays, it is used colloquially.
In Germany, the word “credit card” is mostly used as a synonym for a Visa or MasterCard – regardless of whether it is a card with its own credit limit.
You can read more about it on the page Credit cards in Germany. However, at this point, we want to say that credit cards become more popular in Germany from year to year. The acceptance is growing constantly, so that you can pay for many services and goods with this card.
There is a number of banks that offer different credit card types for free or at a favourable annual fee.
Although American Express is available in Germany, the credit cards nor their acceptance are widespread.
The days when one withdrew cash (Bargeld) at a counter during the opening hours of a bank are as good as gone. You can still do it, but hardly any of the younger generation in Germany does.
It is common to withdraw the cash from the ATM (Geldautomat). This is often free of charge. However, depending on the bank where one is customer, one has to check which ATMs for which bank cards are free of charge.
First of all, one important difference: For banks with its own branch network, withdrawing cash with the Girocard from their own ATMs or from partner banks is usually free. For direct banks (Direktbanken) (online banks), it is usually the Visa or MasterCard.
Withdrawing cash free of charge at the ATM
This overview should be understood as a rule of thumb (deviations are possible depending on the bank):
|Card for cash
|almost all Sparkassen within Germany
|all Volksbanken and Raiffeisenbanken
|Big private banks and their direct bank subsidiaries
|Network of ATM providers “Cash Group“
|Small private banks and their direct bank subsidiaries
|Network of ATM providers “CashPool“
|Independent direct banks
|Visa- or MasterCard
Payments by cheques (crossed cheque (Verrechnungsscheck)) almost do not exist anymore in Germany. However, one can still order cheques at some banks or create them by oneself using a software in combination with the cheque forms.
Cheques can be redeemed at any bank at which one has a current account. Big companies and government agencies also accept cheques.
It is very common in Germany to take care of bank transactions via online banking. For this, most people login on the website of the bank and others use a special Banking software on the own computer.
Transfers are mostly used for one-time payments. For example, if you have received an invoice, then you login online at the bank and enter the payment data in the transfer form. Then the money from your current account will be transferred to the current account of the payee (Zahlungsempfänger).
This type of transfer is free of charge at most banks within the Euro area (SEPA Transfer).
Customers of a bank without online banking fill out a transfer form and submit it at the bank. The bank employee enters this into the online system, for which high fees accrue.
Standing order (Dauerauftrag)
This is a recurring payment of the same amount, for example, the payment of rent, maintenance or deposits to a savings plan.
- A standing order is set up once via online banking or by submitting a form at the bank and then the transfers will be performed periodically (usually monthly). This form of transfer is free of charge.
Direct debit (Lastschrift)
The direct debit (also called debit order (Abbuchungsauftrag) or direct debit mandate (Einzugsermächtigung)) works in the opposite direction. You give consent that someone else may deduct from your current account. This consent can occur once, e.g. if you have ordered something from an online shop, or regularly, e.g. for electricity providers, newspaper publisher, telephone company.
Bank statements (Kontoauszüge)
When you opt for an online current account, you receive the bank statements online in a postbox. For offline accounts, there are bank statement printers (Kontoauszugsdrucker) in the bank branch offices. Both forms are free of charge for the customers. Fees apply, if one wants to receive the bank statements by mail.
Bank statements are created monthly. However, one can always get online access to an overview of account transactions or using the bank statement printers. At some banks it is possible to query the transactions via telephone banking.
Telephone banking is offered by many, but not all German banks, as it is associated to higher costs than online banking. In telephone banking, the same actions as in online banking can be commissioned.
However, all banks are reachable via telephone, some even with 24/7 service hours. This service is offered mainly by direct banks.
Bank types for private customers in Germany
In Germany, there are different types of banks, which have evolved historically. Here you can find the details:
|Who owns the bank?
|Free current account?
|belong mostly to the city or other political subdivision(s)
|many branch offices everywhere
|often, fees apply for a current account or there are high requirements for a free account management
|cooperative banks that belong to their members, organized mostly locally.
|Big private banks
e. g. Deutsche Bank, Postbank, Commerzbank
|banks belong to international shareholders
|branch offices in bigger cities
|Small private banks
e. G. Targobank, Augsburger Aktienbank
|different ownership structures
e. g. DKB, Comdirect, ING-DiBa
|no branch offices
|current account almost always free
Which is the appropriate bank?
If you can waive on a personal consultation or other services (e.g. depositing cash), then a good direct bank is the best choice for a current account in most cases.
However, whether the direct bank opens an account or not depends on the assessment of the customer´s creditworthiness.
Direct banks offer most services free of charge
Free services only pay off for the bank, if the customer uses the account – for example, the bank earns on the interchange fees that incur when using the bank and credit cards and are paid by the payee (this is not you).
Opening a current account
The opening and closing of current accounts in Germany is free of charge and possible at any time.
One takes ones ID card or passport to open an account at a bank branch office. If these are not German documents, then a confirmation of residence is sometimes required. Some banks want an official “registration certificate” (Meldebescheinigung), others in turn are satisfied with ones oral statement.
Some banks also open bank accounts, if the client states an abroad place of residence.
The account opening (Kontoeröffnung) at a direct bank takes place via an account application on the Internet as well as a proof of identity through the PostIdent procedure – for this, one visits the post office with a form of the bank and ones ID document – or via webcam. In latter case, one holds the ID document in front of the camera. Both methods are free of charge for the customer.
Account opening possible via Webcam
At some banks, one has to present payslips (Gehaltsbescheinigung) for a current account with overdraft facility. Others do not require this. For example, the DKB and Comdirect carry out their credit rating (Bonitätsbewertung) only through creditworthiness rating agencies, like the Schufa (credit investigation company) and Infoscore.
Credit rating data of almost everyone, who takes part in the economic life of Germany, is stored there, because banks and other commercial and service companies report their creditworthiness data to them.
More bank services
More popular banking services in Germany are:
- Credit cards
- Loans (Kredite)
- Savings Accounts (Sparkonten)
- Securities accounts (Wertpapierkonten) (incl. savings plans)
Questions on Banking in Germany?
Please use the comments box …
Images: German bank card: PixelPower (fotolia.com)