How To Open A German Bank Account: What Are My Choices?
This week is the start of a mini-series on LiveWorkGermany.com on all things relating to banking in Germany.
So, let’s start with a quick overview of how to open a German bank account and the different choices available to the consumer. Retail banking is not as consolidated as it is in most other European countries and there are hundreds of banks operating in Germany, many of them only operating in a specific city or region.
I will then conclude with some of the most common questions I see in forums and Facebook Groups for expats on all topics relating to how to open a German bank account.
Sparkassen & Volksbanken
These are local banks, with a strong focus on small and medium-sized businesses, regional development and long-standing customers. In UK terms, they are similar to building societies, whereas in US terms, they are similar to credit unions.
While it is true that the Volksbank or Sparkasse brand & logo is the same nationwide, each regional / city Sparkasse or Volksbank operates as an independent entity. What that means to customers is that there are some standardised products and services offered across the whole network, but each bank is its own legal entity and thus determine their own set of charges and T&Cs. In practical terms, your account therefore is not portable from, say, Berliner Sparkasse to Frankfurter Sparkasse if you move within Germany and want to keep the same in-branch access. This is because they may be part of the same alliance but are essentially different banks.
Both of these chains have large branch networks, stretching into city suburbs and also operating extensively throughout rural areas. Don’t expect to pop in there at lunch time to do your banking though…
Nationwide Banks with Branch Networks
These are the antithesis of Sparkassen or Volksbanken. They are banks with a nationwide presence, for whom retail banking in most cases is not their core business. These “big boys” tend to have a stronger focus on wealth management, real estate and investment banking. All of these banks will have you covered if you’re keen on using your bank for more advanced products & services such as stock, options, currency or futures trading, or investment funds. Deutsche Bank, Commerzbank, HypoVereinsBank and Postbank are the major nationwide players who fall into this bracket.
Their branch networks are less dense than Sparkassen and Volksbanken and tend to be concentrated in larger towns and cities, usually in the centre or in the larger suburbs.
Just like most other European countries, Germany has a wide selection of banks operating exclusively online. A significant proportion of these are foreign-owned institutions, due to German online banking taking off pretty late in comparison to the rest of Europe.
Online banks typically have lower charges than brick-and-mortar banks, and telephone customer service is usually available for longer hours than banks with a branch network. The downside obviously being if you have a more complex issue and feel uncomfortable speaking German on the phone, this can be a stumbling block. However, that being said, all of them have email support too, so it’s not really a deal breaker.
Because these banks do not have branches of their own, to withdraw cash they usually offer one of these two options, sometimes even both:
They partner up with, or are part owned by one of the traditional banks, meaning that customers can use their cash machines free of charge. Comdirect, for example, is a partial subsidiary of Commerzbank, and thus their customers can use the network of ATMs owned and operated by the Cash Group alliance. Advantage being it’s just like using a normal brick-and-mortar bank in that sense.
Through their issuance of a MasterCard or Visa, they offer free withdrawals to their customers using their credit cards at any cash machine which has the Visa or MasterCard logo, which in Germany is pretty much any international ATM i.e. any major bank plus local Sparkassen and Volksbanken. It’s then debited typically at the end of each month automatically from your account. Great in that you can use a much bigger network of ATMs without charges. Not so great if you’re bad at managing money and want to keep track real time of what you’re spending.
What do I need to open an account?
This can vary from bank to bank. Nonetheless, it is pretty safe to assume that you will need the following to open any German bank account:
Passport or ID card
Proof of address:
In almost all cases the required document is a Meldebescheinigung, or proof of registration, which is obtained from your local Bürgerbüro or Einwohnermeldeamt. Google this with the name of your city to find out location and opening times.
For non-EU nationals, some banks may request to see your visa or an official document from the Ausländerbehörde which period for which you are legally allowed to stay in Germany.
Some banks may also request proof of income or employment if one of the preconditions of the account is that you have to have a monthly salary (or minimum monthly amount) paid into it. This, however, must be specified in the terms and conditions of the account, so should not be a surprise to you when you open the account.
I have heard that the startup N26 Bank does not insist on proof of address when opening an account, and has thus become a favourite for digital nomads and other folks who either have no fixed address in Germany, or are living in temporary accommodation but need banking facilities set up before they obtain a more permanent residence.
On the one hand, on expat Facebook groups and forums their customer service and App functionality seems to have great feedback. The downside is that their security was found to have some holes in it leaving it susceptible to hackers, resulting in some customers’ money and identities recently being stolen.
Therefore my recommendation is to be very careful about how much money you deposit into your account if you decide to use N26. I totally agree that their concept and services have many advantages, however, I would be cautious about how much money you deposit.
What Is PostIdent?
If you open an account with an online bank, there is no way during the application process that you are able to verify your identity. Online banks get around the need for notarised documents by using the PostIdent facility.
This works as follows:
- You apply for the bank account online and submit the application.
- Assuming your application is accepted, either a few days later you will receive in the post a form from the new bank, together with a postage paid, pre-printed envelope. Or, you will receive immediate notification online that your application has been approved and you are able to download and print the required documents.
- Go to any Deutsche Post post office or counter, together with your passport or ID card and your Meldebescheinigung.
- The post office clerk will verify your ID from the photo on your passport or ID card and stamp the PostIdent form. The whole process only takes about 2 minutes.
- You put this, together with your Meldebescheinigung into the pre-paid envelope provided and send this to your new bank for processing.
- Usually around a week later you receive confirmation of your account number (IBAN) and your debit card (if you ticked the box requesting one in the application).
Why has my application to a certain bank been rejected?
It can happen that banks refuse to accept applications for Girokonten or current accounts (checking accounts in US English) from foreigners who have just recently arrived in Germany. There is a simple reason for this. Some accounts, as part of their terms and conditions, stipulate that you must have a monthly salary being paid in. If you don’t have a fixed employment contract, that’s obviously not possible. Others simply may want to see some credit history (known in Germany as SCHUFA) before they will accept you. Annoying, I completely understand, but this is sadly reality.
If the institution offering the most suitable account for your requirements rejects your application, wait for a few months or a year, then try again. Sparkassen and Volksbanken tend to be the least fussy when it comes to accepting new customers who do not have any credit or banking history in Germany.
Is it free to withdraw cash from anywhere?
Unfortunately, no it isn’t.
Unlike in the UK, for example, German banks do not have an agreement or understanding that their customers can use each other’s ATMs for free.
There are 4 main networks of cash machines: Volksbanken, Sparkassen, Cash Group (Deutsche Bank, Commerzbank, HypoVereinsBank and Postbank) and Cash Pool (an alliance of mainly foreign-owned banks, as well as some smaller German players).
In small towns and villages, there will often only be a Sparkasse or a Volksbank ATM.
Fees usually range from €3 to €5 if you use an ATM which is not part of your bank’s network or alliance. Therefore, the advice is, if you’re travelling into the boonies for a long weekend (hiking, spa, ski trip, camping), go to your bank at home before making the trip, to avoid being stung by rip-off ATM service charges.
Will They Provide Customer Service In English?
Is it realistic to expect customer service in a foreign language for a standard bank account? Of course not!
Before you say I’m being too harsh, I do understand why this is asked so frequently. If you’ve just arrived in Germany then I appreciate it’s hard, and that opening a bank account is one of the first bureaucratic hurdles you have to accomplish. Of course, as a new arrival, you probably can’t speak fluent German. What confuses me, however, is that people are genuinely surprised to find out that banks in Germany do not routinely have English speaking service employees. Why should they?
In most cases it is a case of good fortune whether there is an employee in your branch who speaks English, or a helpful customer service team member at an online bank who will forward your email or phone call to an English speaking colleague. As with most things in life, if you are friendly and you speak slowly and clearly, your chances of success here will probably be higher than approaching this with a feeling of entitlement and speaking normal speed, without moderating your accent.
From reading online forums and Facebook groups, it seems that most branches of Deutsche Bank, at least in major metropolitan areas, will offer some level of English-speaking account management service in branch, and N26 also has some online English services.
Which bank should I go with?
Well, that depends on a few criteria. What is important to you as a customer? Look out for the follow-up posts next week which will go into more detail on the various factors to consider, and will give you some clearer answers to this question.