INFOYER I Finances - Banking systems in Germany

The currency used by a nation forms the fundamentals of the nation’s banking system. Germany along with eleven other countries in West Europe adopted the Euro as their currency in 2002, following which many other countries joined. The Euro is used as the monetary unit in more than 20 countries and by more than an estimated 335 million Europeans. It now enjoys the status of being one of the world’s most powerful currencies because of its widespread usage. 

German Banking System

German banks can be broadly classified into four categories: private commercial banks (also known as private Geschäftsbanken), Sparkassen or savings banks, Kreditgenossenschaften or credit cooperatives and the Postbank. As a regular banking individual the differences between the categories is usually of little relevance. The most standard type of bank account, known as the Girokonto (konto = account) follows the regulations relevant to any standard checking or current account. 

Setting up a bank account in Germany would most likely be high on your priority list of things to do once you arrive, if you are to stay for a longer period in the country as an expatriate. The processes involved are fairly simple and similar to standard procedures followed elsewhere. The documents/things imperative to opening the account are your passport and the money to be initially deposited. A cash deposit leads to instant opening of your account while a funds transfer from your account back home will often take longer till the amount is credited. You may also need an Anmeldebestätigung – the proof of a German address in certain cases. 

The fees for various services offered with a Giro account differ across banks. Students are eligible for a bank fee waiver. A comparison between banks often yields results indicating differences in the interest rates offered by saving accounts. 

For most transactions, once your bank account is active, you will be using what is called an EC-Karte, issued by the bank. This is the equivalent of an ATM card used for cash withdrawals from the automated teller machines – ATM, referred to as a Geldautomat in Germany. The EC Karte can also be swiped for payments at most supermarkets, shopping centres, gas stations and other stores, in which case you will be required to validate the transaction by either entering your 4 digit PIN number or with a signature. Some EC cards have both a magnetic strip at the back and a chip on the front. The chip is rechargeable with sums up to 200€ and the card can subsequently be used like a cash card for small transactions in selected stores/outlets. Getting account statements and using it at special terminals in banks for particular transactions are among its other uses. 

Apart from the banks themselves, several stores, railway stations, shopping malls, pedestrian zones and commercial streets have ATM machines (Geldautomat) marked distinctly with large ‘EC’ signboards. Withdrawing cash from the ATM of your own bank or sometimes even another bank belonging to the same group, is mostly free of charge across Germany and some neighbouring countries. Getting cash with your EC card from a different bank is often charged. The charges levied usually vary between 1€ and 10€ and could be a percentage of the sum withdrawn or a flat rate. 

Credit cards
are also gradually gaining popularity in Germany. You can use them against cash advances at a select few international bank ATMs, for payments in some shops, hotels & telecom service stores or to purchase train/flight tickets both on and offline. Having said that, it is recommended that you check regarding the acceptability of credit cards well in advance.

Germany has many bank- and credit institutes. Here are somy examples:

Bank Institutes

Credit Institutes

Banking in Germany: Online Banking

Online banking in Germany functions in much the same way as anywhere else in the world. You would normally be assigned or be required to set up a username, password or PIN number for online/home/phone banking. Checking your balance or transferring funds with TAN numbers issued instantly and sent via SMS, email or in the form of bar codes on your computer are transactions that can easily and conveniently be completed from the comfort of your homes, offices or even on the move! 

Banking in Germany: Options of making a payment

You can avail of one of the following options when making a payment: An Überweisung or transfer as we know it, from one account to another can be made by filling out the relevant form manually or online (with a TAN number). A convenient method commonly used to make fixed recurring payments like rent, loan instalments or insurance premium is a standing order or Dauerauftrag, wherein the fixed sum is deducted periodically on a predetermined date. For variable recurring expenses like utility bills, a direct debit or Lastschrift is the more practical mode of payment. The recipient in this case is authorized to directly deduct the amount due. You have the choice to cancel the authorization at all times. Protection against misuse is assured by giving you the unrestricted 90 day right to recall any amount that may have been debited from your account using this method. 

Banking in Germany: Other useful informations

An overdraft facility may be available to you once you have set a line of credit (Dispositionskredit). The limit usually is a sum that amounts to two or three times your monthly earnings. High interest rates (sometimes even up to 18% per annum) associated with overdrafts make regular usage of this facility an expensive proposition. So you may want to be careful before you indulge! 

German banks allow the consumer to avail of a wide range of services including purchase of stocks & bonds, foreign exchange services, insurance, systematic investments, asset management, real estate dealings and funds transfers across the world. Most of the bigger banks have International Helpdesks to cater to English-speaking expatriate customers and address all concerns and queries related to services offered. 

Banking hours in Germany are normally from 8.30 a.m. to 4 p.m. during the week. Some banks are open until 5.30 or even 6.30 p.m. with the exception of a few smaller branches that close business around lunchtime. Most ATMs and statement printers in the banks are open and accessible 24/7.