Everything You Need to Know About Banking in Germany
Expatriates have several options when it comes to banking in Germany. As a new arrival or legal resident, you will be able to choose from a range of private, international and public banks and cooperatives, and can open more than one account to access the specific features you need.
The German Banking System
Germany is home to several hundred financial institutions that are regulated by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, more commonly known as BaFin). The central bank of Germany is Deutsche Bundesbank—not to be confused with the global banking brand Deutsche Bank.
Currency in Germany
The currency used in Germany is the Euro, which equates to 1.12 British pounds (GBP) and 0.88 US dollars (USD). Germans use 5, 10, 20, and 50 cent coins, €1 and €2 coins, and notes with a value of €5, 10, 20, 50, 100, 200 and 500. For everyday transactions, you will rarely use notes with a denomination above €100.
Banks in Germany are typically open from around 8:30-9:30 am until 4:30-5:30 pm, Monday to Friday. Check your bank’s website to find out their specific opening hours.
Types of Banks in Germany
Private Commercial Banks
Private commercial banks account for around 40% of German banks and offer the full range of financial services. Two-thirds of these are centralised chains, with around 200 small regional banks making up the final third.
By balance sheet, Germany’s largest private banks are:
- Deutsche Bank
Deutsche Bank and Commerzbank also have an arrangement with HypoVereinsbank (collectively referred to as “the Cash Group”) such that members of any of these three banks can withdraw from the other two banks’ cash machines for free. This will be especially helpful for expats who bank with Deutsche Bank in their home country and plan to withdraw cash once they arrive.
Several of the largest international banks operate in Germany, including:
- Banco Santander
- DHB Bank
- ING Group
If you already have an account with one of these banks or this bank exists in your home country, you can open a bank account before you leave and request to be transferred to a German branch once you arrive.
If your primary objective with banking in Germany is to save, you might prefer to open an account at one of the country’s publicly owned savings banks. Within this category, there are local savings banks (Sparkassen) and regional savings banks (Landesbanken).
In every major German city, you will generally find plenty of Sparkassen, including BerlinerSparkasse, Frankfurter Sparkasse and Stadtsparkasse Munich. There are a total of seven Landesbanken, which are centrally located in Germany’s regional states.
Cooperative banks make up the third major category in the country’s banking system. There are almost 1,000 cooperative banks in Germany, including local cooperative banks (operating under the Volksbanken and Raiffeisenbanken umbrella), industry-specific credit institutions, PSD-banks and Sparda banks. The number of cooperative banks has reduced over the last decade but their consolidated total assets have increased.
For investment banking in Germany, expatriates have a choice between international investment brands and local German investment banks. Baader Bank AG is a well-known German investment bank that is headquartered in Unterschleißheim.
Online Banks or Direkt Banks
Online banking is perhaps the most convenient option for foreigners in Germany who travel frequently, live between countries or make regular international money transfers. Many expats use online banks to transfer money internationally and traditional banks for cash and in-country financial transactions.
Some of the most popular direkt banks in Germany include:
Merchants who wish to start a business in Germany will need to open a merchant account with an acquiring bank in Germany. As a payment processor in Europe, Unicorn Payment is able to handle applications for merchant accounts for business owners in Germany in addition to providing a global payment gateway and all-inclusive merchant services.
Types of Bank Accounts in Germany
For banking in Germany, most expats will choose to open an everyday account, known as a Girokonto. You may be provided with a debit card free with this kind of account and will pay around €0-5 per month in maintenance fees.
A Sperrkonto or “blocked account”is a special kind of account that caters to the needs of international students and others who don’t have an employment contract in Germany. The account is used to prove that the person has enough funds to cover their stay and is often required when applying for a visa.
Some banks allow foreigners to open a Sperrkonto from abroad while others require foreigners to submit the documentation in person. The applicant will pay a fee of €50-150 to open the account and around €5 per month in maintenance fees. The annual amount to be deposited in a Sperrkonto (as of January 2022) is €10,236. Students can withdraw up to €853 per month.
Non-residents who operate a business in Germany may be interested in an offshore or “non-resident” account that offers specialised cross-border features and low taxation rates.
In Germany, Deutsche Bank and Commerzbank are two of the most well-known institutions that offer offshore accounts. However, it’s a good idea to compare the fees (Kontoführungsgebühren) before you sign up as you could save money by shopping around.
Common Forms of Payment in Germany
Cash is still the most popular payment method in Germany. According to Deutsche Bank Research, 74% of transactions in 2018 were carried out with cash. Usually, Germans pay for low-cost items such as transport fares, coffees and drinks in cash.
Debit cards are more popular than credit cards with German consumers and a Visa or MasterCard debit card is usually issued automatically when you open a German bank account.
As an alternative to debit cards, you can purchase a non-linked card that you charge with cash and can use to make contactless payments or to withdraw money from an ATM. In German, you will hear cash cards and debit cards collectively referred to as “girocards” or “EC cards”.
In Germany, you can obtain a credit card through your bank or by contacting a card network directly. Germans usually use credit cards when making online purchases, preferring debit cards or cash for in-person shopping. The main credit card brands in Germany are Visa, MasterCard and American Express.
Standing Orders and Direct Debits
When banking in Germany, standing orders and direct debits are convenient ways to make regular payments for things like:
- Utility bills
- Insurance premiums
- Subscription fees
Direct debit (Lastschrift) is the most popular form of regular payment. It is used for utility bills, insurance and subscriptions. In this arrangement, you authorise the third party to make a regular withdrawal from your account. The actual amount debited might vary (this is especially convenient when it comes to paying bills).
In contrast, a standing order (Dauerauftrag) is an order that you give your bank to make a regular, fixed payment to another account. This arrangement can be used for things like rent, mortgage, insurance and subscriptions that cost the same amount each month.
You can cancel direct debit and standing order arrangements at any time by contacting your bank and/or the third party that you previously authorised to make withdrawals.
Mobile and Online Payments
Mobile payments are not very common in Germany—especially compared to other European countries. Around 11% of smartphone users in Germany pay with payment apps, compared to 40% in Denmark and Sweden.
Online payments, however, are common. In fact, e-commerce in Germany was worth €99 billion in 2021. Usually, online payments are made with a debit or credit card linked to an account with PayPal, Google Pay, Apple Pay or a dedicated mobile banking app.
How to Open a Bank Account in Germany
Opening a German bank account is a fairly streamlined process. However, you’ll still need to provide several documents to prove your identity and status when opening bank accounts in Germany.
Generally, you will be asked to provide:
- An ID document, such as your passport
- Proof of address (Meldebescheinigung) obtained from your local Bürgeramt
- A valid German visa
- Proof of employment (such as payslips) or proof of student status for a student account
- A minimum initial deposit
If you open a German bank account online, you may be asked to upload a notarised copy of your identification document in addition to copies of your other documents. You will also need to provide proof of German residency. EU residents can open an account before moving to Germany. However, new residents from countries outside of the EU will need to wait until they arrive to start banking in Germany.
Fees for Banking Services
Fees are part of banking in Germany, just as they are in any other part of the world. You can expect to pay €0-5 per month for a Girokonto and €0-100+ annually plus annual percentage rate (APR) fees for a credit card. Debit cards are usually free.
For an overdrawn bank account, overdraft interest rates range between 4-12%. It’s important to know ahead of time how much the bank will charge before overdrawing an account.
Withdrawing cash from an ATM that doesn’t have a cooperative agreement with your bank costs around €5-7 per transaction, which is something to keep in mind when withdrawing funds from a foreign bank.
SEPA (Single Euro Payments Area) transfers are free to make or €5 for instant payments. Transfers to non-EU/EFTA countries usually cost at least €10 per transfer, with higher fees for larger transfers.
Loans and Mortgages
Interest rates for loans and mortgages in Germany are set according to the Annual Percentage Rate. You can also expect to pay additional fees. Shopping around can help you find the best deal for a loan or mortgage.
If You Need Help when Banking in Germany
Lost and Stolen Bank Cards
If you lose your card in Germany or suspect it was stolen:
- Let your bank know straight away.
- Call 116 116 (toll-free) to block your card or 01805 021 021 if you have lost your girocard.
- If you have been assaulted or robbed, report the incident to the nearest police station.
Problems with Your Bank
If you have a complaint about your bank, you should first lodge your complaint directly with your bank. If the situation still isn’t resolved, you can contact the independent Financial Ombudsman in Germany. If you are still unsatisfied with the outcome, you can take legal action through the German court system.
Fraud and Security
German bank cardholders can become victims of scams and fraud, with 800,000 instances of bank card fraud taking place in Germany in 2016. To protect yourself against bank card fraud:
- Always access your online banking by typing the full URL into the address bar (never click on a link in an email that’s claiming to come from your bank).
- Never give, tell, or share your PIN with anyone online.
- Make sure any online purchases are made through a secure online gateway.
- Don’t store any personal data on your cell phone.
To protect their customers, many German banks nowadays use biometric authentication (face and/or fingerprint recognition) instead of passwords. This is something to keep in mind when opening a bank account in Germany.
The Best Bank for You
With banking in Germany, the best way to enjoy the features you need is to compare the options and maximise the features that each kind of financial service offers.
Many expats have a physical bank for their everyday banking needs, an online account for international transfers and may also have an investment account or blocking account—depending on their employment status and goals.
Talking with other foreigners who live in Germany and experimenting (with a small amount) are the best ways to find the solutions that are right for you.