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Germany > Financial

Germany

An Expat Guide To Banking In Germany

Published Friday November 03, 2017 (14:22:10)

 

Choosing the right bank can be both stressful and tedious in equal measures. If you’re new in Germany and asking yourself if you need to open a German bank account, the short answer is yes! If you plan to earn money or rent a house in Germany, then you definitely need a German account. Most employers, companies and landlords will not do business with an international account holder.

You may now be wondering how easy it is to open a German bank account. That depends on the bank, but generally it’s not a one-day process. Despite what you might read online, opening an account is not as easy as showing up with your passport and some cash. Sorry to be the bearer of bad news!

This article will cover:
• Which documents you will need to apply for a German account,
• The basics of banking in Germany,
• Which German banks are the best for expats.


How To Open An Account

Something that confuses many new arrivals is that, to open a German bank account, you must first register in Germany. In order to register in Germany, you need a rental agreement, which will prove that you live in the country. This means that before you’re even go near a bank, you’ll need to first complete these two steps and have the paperwork to prove it.

Armed with your passport and your Meldebescheinigung (certificate of registration in Germany), you can now start searching for the best bank for you. Some banks will also require you to submit pay statements from your employer, but this depends on the bank and the account you want to open.


The Basics Of Banking In Germany

Be warned that banking in Germany is not an experience in modernity or technology!

The most common account in Germany is a giro account, otherwise known as a chequing or current account. If you open a giro account, the bank will provide what’s called an EC card. These are similar to debit cards, but without any of the normal add-ons that international banks offer, such as a card number for online shopping or PayWave/PayPass services. Using your EC card will sometimes require a four-digit PIN sent via post, or a signature. Most banks allow their customers to apply for credit cards, but these are not standard when opening an account and will cost extra, although online banks are an exception to this.

Many stores in Germany, most notably pharmacies, will not accept card payments unless they are with a German EC card. Moreover, the select few institutions that do accept Visa or Mastercard will normally charge an additional fee for these credit cards. As a rule, Germans are suspicious of credit cards and are extremely averse to any form of debt. Given this, bringing your account into overdraft is neither an easy nor advisable task. Most banks will only allow their customers an overdraft loan after six months with a German bank, and customers will need a positive SCHUFA rating (SCHUFA is the main German credit score agency). Bringing your account into overdraft is also very costly and could have interest rates as high as 11 to 18 percent per annum.

In short, Germany runs on cash. So when considering a bank, it is essential to think about which ATMs (Geldautomaten) are near your house or work. This is important because fees for using ATMs that are not affiliated with your bank can be exorbitant; around €5 per withdrawal.

Online banking can be a bit clunky in Germany, although it is improving. Doing online transactions with most of the big banks will require TAN numbers. TAN numbers are a list of 100 unique codes your bank sends out in the mail. Make sure that you don’t leave your TAN numbers behind if you go on a trip; without them, you will not be able to transfer money or shop online. Luckily, customers can now opt for mobile TAN, which means the code is generated through the mobile app. Other variations known as Photo TAN or Push TAN are also available at some banks and work with an app.

If a retailer supports a system called Sofort Banking, you can shop online using your German EC card. The system is not smooth though, especially in comparison to PayPal or Visa. You will need to punch in your IBAN, account number, bank branch number and so on. To finish the transaction, you will also need a TAN number. Any devoted online shopper should certainly take the types of cards banks offer into consideration when deciding where to open an account.


The Best German Banks For Expats

The biggest problem most expats face when banking in Germany is the issue of language. Most German banks do not offer services or resources in English. Unless you speak German or have a German speaker you can rely on to consistently help you with banking, it’s probably not a wise idea to take out an account in a non-English friendly bank.


N26

Since its recent launch, N26 has exploded onto the German market. This bank has become especially popular with the international community because all its services and resources are offered in English. Moreover, the account is free.

One of the first truly modern and user friendly banks in Germany, N26 is entirely online, meaning it does not have any physical branches. Instead, it operates through digital platforms including the mobile app and website. Customers can call the bank any time for advice or help.

N26 allows customers to use any ATM worldwide for free to withdraw money up to five times per month. However, N26 does make money from some Mastercard payments, so you will have to make some unexpected payments.

Importantly, N26 is not restrictive with its customers and a credit check is not required to open an account. It is also the least bureaucratic bank in Germany, so opening an account here is a far quicker and easier process than most of the traditional banks. Further, if you’re lucky enough to be an EU citizen, you don’t need an Meldebescheinigung to sign up with N26 now, which will make your first week in Germany a bit easier.


Deutsche Bank

As far as the big traditional German banks go, Deutsche Bank has made the most effort to corner the international market. Compared with other banks, it offers the most services in English, including English speakers in branches and on the hotline, as well as online banking in English.

However, on the down side, Deutsche Bank is expensive. It also doesn’t have a lot of branches, so you will have to be aware of which ATMs you can use without racking up huge costs. It can be helpful to remember that Deutsche Bank is part of the Cash Group, so its customers can also use Commerzbank, HypoVereinsbank, and Postbank ATMs for free.


Commerzbank

Commerzbank also offers some services and resources in English. Customers can bank online in English, and Commerzbank tries to ensure that English speakers are available in their branches, although this can only be guaranteed by appointment. If you deposit €1200 per month, their giro account doesn’t have a monthly charge.


Targobank

Formerly Citibank, Targobank also offers services in English as well as online banking. Like Commerzbank, they offer free accounts depending on your monthly deposits.


Options For German Speakers

If language isn’t an issue, there are several other online banks that are popular and competitive. As a standard, these banks tend to offer free accounts, free ATM withdrawals, and a free Visa or Mastercard that can be used worldwide. However, this doesn’t mean that there are no costs associated with these banks. The costs may just be better hidden! For instance, most online banks charge a fee for replacing lost cards.


DKB

DKB is an entirely online bank that offers its customers free ATM withdrawals. However, unlike many other banks, your monthly income will dictate whether you are accepted as a customer. DKB also lets customers sign up abroad so you can have a German account before arriving in Germany, which can be helpful.


Comdirect

Comdirect offers many of the same perks of DKB but is less restrictive with who they accept as customers.

You can contact both banks are via phone or email, so the risks associated with not having physical branches are insubstantial. However, in order to hold an account with either of these banks, you will need to speak German.


Useful links

Banks-Germany.com is a helpful website for comparing German banks in English.
This page also offers basic information on German banking terms and how the banking system works.


Have you lived in Germany? Share your experience in the comments below, or answer the questions here to be featured in an interview!


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