Sparkasse vs. DKB and/or ING-DiBa

The end of the free current account?

16.1.2018

In the end of the 1990s, the triumph of the free current account – first as a salary account, later completely without requirements. Drivers were the new direct banks, who wanted and also had to acquire customers.

At first, a trend towards secondary and third account developed – as it was free of charge. Now, it passes over to the trend of cancelling old expensive accounts.

What you should do now being a private customer!

How will the price models of banks and Sparkassen further develop? Is an account switch worthwhile or will there soon be account management fees everywhere (as happily announced by Sparkassen)?

As an introduction, a small current account comparison

	Sparkasse	DKB	ING-DiBa
Account management fees per year	⌀ Euros 81.36 equivalent to Euros 6.78 monthly	Euro 0.00	Euro 0.00
Girocard per year	⌀ Euros 3.12	Euro 0.00	Euro 0.00
Visa or Mastercard per year	⌀ Euros 28.71	Euro 0.00	Euro 0.00
Accounting entries (144 × per year incl. standing orders and SMS mail)	⌀ Euros 16.46	Euro 0.00	Euro 0.00
Cash withdrawals within the alliance (55 × per year)	⌀ Euro 1.10	Euro 0.00	Euro 0.00
Cash withdrawals third-party bank (8 × per year including abroad!)	⌀ Euros 45.06	Euro 0.00	Euros 13.13
	Foreign transaction fee included!
Subtotal
Average fees for the current account per year	⌀ Euros 175.81	Euro 0.00	Euros 13.13
Average saving per year	–	Euros 175.81	Euros 162.68/b>
		Is this difference worthwhile for you to open a new current account?
General services and their costs
Telephone customer service	⌀ 8:42 am – 4:40 pm Monday-Friday (branch office visit partially necessary)	0 am – 12 pm Monday–Sunday	0 am – 12 pm Monday-Sunday
Personal customer service	⌀ 8:51 am – 3:54 pm Monday-Friday	not possible	not possible
Overdraft facility interest rate	⌀ 10.47 %	6.90 %	6.99 %
Instalment loan interest rate	⌀ 4.85 %	3.49 %	3.79 %
Call money interest rate	⌀ 0.02 %	0.20 %	0.10 %
Depot fee per year (without transaction costs)	⌀ Euros 14.29	Euro 0.00	Euro 0.00
Before you decide to open or completely switch to a free current account at Germany’s leading direct banks as a secondary account / account as a test, please read this article to the end.

Expect further fee increases at Sparkasse!

Before we deal with the DKB and the ING-DiBa, there are some notifications from the Sparkasse area that should call your attention.

Even if it is not “your” Sparkasse in the single case … Within the savings bank alliance, one is united that after the fee increases of the last two year, there will be a wave of fee increases also in the year 2018.

Following are the new fees or fee increases for Sparkassen customers:

• Increase of the monthly account management fee
  But not too much, because the willingness to switch will increase too … Instead, there are fee increases, which people do not recognize easily:
  • Increase or introduction of the annual fee for the SparkassenCard
  • Increase or introduction of the annual fee for the credit card
  • Increase or introduction of a fee for accounting entries on the account
  • Price increase of fault fees (e.g. return debit)
• Increase or introduction of a fee for cash withdrawals
  On the part of the big politics, there is a “fight against cash” since months; especially savings banks which are controlled by politicians will be used as willingly helpers.

• Increase or introduction of a fee for account statement inquiries
  Formerly, one logged into the online banking system as a customer perhaps 2 to 12 times per month.

  

  Being a customer of the ING-DiBa, you can use such an app free of charge.

  At each login, the current account balance is shown. In order to be able to show it, there is an inquiry at the alliance data centre. There is a fee order for such inquiries. That means that when you inquire your account balance, your bank has to pay for it at the data centre. Up to now, these costs were insignificant.

  With the growing Smartphone use and the increasing number of account balance inquiries, the fees for your bank rise.

  The service “all-accounts-in-one-app” (multi-banking), as introduced to the market by more and more banks, make the costs explode! The account balance inquiries multiply!

• Introduction and expansion of the negative interest for account balance
  In principle, it is about the forwarding of the fee that the European Central Bank deducts of banks and savings banks for account balance (money storing fee).

Why will the Sparkasse increase the fees again?

Within the mainstream press, one repeatingly states that the low-interest phase that persists since years is the (main) reason for it. This is true. The interest gains were more abundant than today. But this is only half the truth.

Let’s complete the picture. Sparkassen are also burdened by:

• Building expenses (maintaining and modernizing costs)
  There was no day during the last three years, on which no Sparkassen-Filiale was closed forever (dying of branch offices).
• Staff costs
  By that, not even the lushy management salaries and grand business trips are referred to … In branch offices generally more people work, which tendentially earn more money at the Sparkasse than in a callcenter of a direct bank.
• Additional expenditures through statutory provisions
  In the past years, the legislator have generally enforced many provisions to the banking industry, which implementation costs a whole lot of money. At a lean direct bank with perhaps 9 million customers, the implementation costs per customer are, of course, a lot lower than at a Sparkasse with 0.3 million customers.
• Revenue shortfalls through statutory provisions
  On the other hand, the legislator has partially cut down the revenues of banks. Especially at the card payment, the fees were drastically lowered to prepare the path of the cash abolition/minimization.

… and the most important reason?

The fee increases of Sparkassen especially affect people, who do not want or cannot switch!

The market share of private customers in the year 2000 was still 45 per cent in favour of the savings banks, today it is only a little more than 30 per cent. That means that the savings banks have lost a third of all customers within half a generation.

They have lost especially a lot of “good customers”, who have an easy time to open a top current account at an outstanding direct bank.

Still savings bank customers are over-proportionally people on the countryside, elderly people, low-wage earners, students and trainees (most of the time, they still have a free account management and often switch as soon as the fee applies) and of course also (permanent) unemployed people, and other receivers of state transfer payments.

That means that the Sparkasse soon reach a point at which they can continuously increase the fees without losing customers significantly.

Currently, this is not entirely the case, as the flood of account opening applications at our leading directs banks DKB and ING-DiBa shows. This flood has kept on for the whole year and will rise again towards the end of the year.

This is why the DKB and ING-DiBa won’t introduce account management fees!

Of course, direct banks are also affected by cost increases and revenue shortfalls caused by the politics, but they are build much leaner and therefore, are not hit as hard per customer.

Moreover, the costs per customer are considerably lower (fewer “problem cases”, fewer employees, fewer buildings – but more customers!)

… and the most important reason?

The free current account is the core of the business model!

Both of the banks mentioned by me cannot abolish the free account management! They have gone through this from all sides in the past two years (I have good contacts). Both current accounts will remain free of charge. This is set and done!

In order to keep it this way, they have made other actions, such as the active/passive customer model at the DKB, which also intend a minimum amount of Euros 50 per cash withdrawal. However, this is free of charge unlimited in the number. Also the interest for account balance was lowered a lot.

However, the three most important parts will remain free of charge also in the coming years:

• numerous free possibilities of cash withdrawals
• free bank and credit card
• free account management.

For those, who do not have it yet, it is meaningful to open a new current account!

Of course, at one or both of the top direct banks DKB and/or ING-DiBa. Perhaps at first to try dealing with a direct bank. Later on, one can still decide, whether one wants to cancel the old Sparkassen-Konto!

At the ING-DiBa, there is currently even a bonus in connection with a current account opening:

Tips of our smart-bank-customer-community:

1. Open a DKB current account
   Arrange to transfer the salary to it. By doing so, you easily get an overdraft facility in three-times the salary amount, up to Euros 15,000 is possible. The same applies to the credit card limit.

   Link ► www.dkb.de/dkb_cash

2. Apply for an ING-DiBa-credit line
   With this, you organize yourself an additional credit line, just in case. Read here, why this is meaningful. Afterwards, one can open the current account too.

   Link ► www.ing-diba.de/rahmenkredit

   If the DKB is not eligible, go immediately to this article.

3. Let all accounts run parallel for three months and test them extensively.

   This includes a call and an e-mail to the customer service.

4. Now you can decide with which accounts you want to continue

   If you want to stay with your savings bank, then this is also okay. In any case, you now have experienced the other side personally and can still keep the possibility of using the online account for vacations or the like. Cancelling is no problem either. One can do this through a short letter, done!

How did you do it / how will you do it?

Our community lives from the exchange of ideas and experiences with each other. Please use the comments box to share your strategy with us. My team and I would be glad to answer your questions about the clever account opening and use of our favourite banks.