One of your first tasks upon arrival in Germany will be to find somewhere to bank. The choice of German bank accounts can be bewildering, and there are many poor deals out there. We walk you through the how to, then cover which are the best free accounts to choose. Finally, we cover the process of switching accounts, in case you chose the wrong bank upon arrival and now want to move to one of the free options.
Opening German bank accounts will normally require prove your address by means of a Meldebestätigung, so if you have not done your registration (Anmeldung) at the local citizens' office (Bürgeramt) yet, you will need to perform this task ahead of attempting to open a bank account.
How To Open A German Bank Account
So, let's start with a quick overview of how to open your account and the different choices which are available to you as 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 being small regional players who only operate in a specific city or region.
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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 the Volksbank or Sparkasse brands and logos are 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. They may be part of the same alliance but essentially they are 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.
The major players who fall into this bracket are:
- Deutsche Bank
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, if you need 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 “Bürgeramt the name of your city” to find out the location and opening times.
For non-EU nationals, some banks may request to see your visa or an official document from the Ausländerbehörde, stating which dates 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.
The smartphone App bank N26 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.
What Is PostIdent?
For those German bank accounts which are provided exclusively online, 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, or by using various third-party Apps and services to verify your identity via video through your smartphone or laptop's camera.
PostIdent 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).
We have not tried PostIdent's video service personally but we have used another video identity service and our experience was pretty bad. Long waiting times with the call centre, unreliable technology (it could not read my ID via the camera). In the end, long story but it didn't work. We don't wish to tarnish all of them with the same brush, but just a word of warning that it may be quicker to use ye olde method!
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 before they will accept you. Annoyingly, this is a sad reality. DKB is another free bank account which is regularly promoted by various websites and bloggers, but we have heard stories of them rejecting newcomers for these reasons.
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.
N26 are definitely not selective. If you want a more traditional bank, then Sparkassen, Volksbanken and Deutsche Bank tend to be less 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:
- Cash Group (Deutsche Bank, Commerzbank, HypoVereinsBank and Postbank)
- 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 we're being too harsh, it is perfectly understandable to understand why this is asked so frequently. If you’ve just arrived in Germany then 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 us, 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.
N26 also has online English services and their App will automatically default to English if this is the operating language of your smartphone.
Which bank should I go with?
Well, that depends on a few criteria. What is important to you as a customer? Let's go into more detail on the various factors to consider, and will give you some clearer answers to this question.
Free German Bank Accounts: The Best Options For Expats
You may not be aware that most banks here in Germany charge a monthly administration fee for the pleasure of you holding a current (US: checking) account, known as a Girokonto in German, with them.
Save yourselves some time and money and read on!
If you are paying for the privilege of having a German bank account, I strongly recommend you stop throwing money down the drain and consider one of the options below.
In case you'd prefer this guide in a convenient downloadable FREE e-book, just click on the button below!
What are your “must-haves”?
First thing we need to establish is: What is important to you?
- Do you want access to a branch network?
- Do you want to do more or less everything on your smartphone or tablet App without having to log in on a computer?
- Do you want to have your credit card with the same institution as your main bank account?
- Do you have a regular salary which will be paid in?
- Do you want other services from your account?
This will influence the choices which are out there.
If you want access to branches, low overdraft charges, or the ability to have an account for casual use rather than somewhere your salary is paid into, this is going to limit the choices you have. All retail banks have to make money from something. By keeping overheads low or by maximising profit on non-essential services are all ways they do this.
Before we get to the list…
There are a number of accounts out there which claim to be free…but free is not always free!
The ones we are happy to recommend below are all free for:
- Cash withdrawals from their own (if applicable) and partner organisation cash machines
- Transfers from your account to any other bank account as part of the SEPA-transfer protocol, made in Euro and inside the Eurozone
- Day-to-day transactions and management of the account
- Issuance of a Girocard i.e. a debit card or electronic cash
- Monthly statements, as long as you receive these online as PDF files and you clear out your mailbox regularly
- Calling customer service and speaking to an actual person (this also applies to email queries which are responded to by a person, not just a link to their FAQs)
In the individual recommendations section below, we expand on this to explain in more detail for each offer. All of the above are valid for each account though.
Free under what circumstances
All of the above are free for the accounts we have recommended. This could mean that charges could be higher than average for other products offered by the bank. They have to make their money somewhere, right? Examples are:
- Stock trading accounts
- Unauthorised overdraft charges
- Transferring money in other currencies or to non-Eurozone countries
But the good news is…there are ways around all of these.
There are literally hundreds of options available if you want to trade stock. Do your homework. If you understand how to buy and sell stock, then you're smart enough to research this to ensure you don't sign up for a poor value product with bank account provider.
Unauthorised overdraft charges can be worked around by agreeing an authorised overdraft (Dispo) limit up front when you open your account, or at least after a few months of banking with them if you have no credit history and the bank refuses this at the offset.
Even authorised overdraft charges can still be relatively high though, at anything between 10 and 15% typically. But hey, if you borrow money short-term, it's rarely cheap.
The lazy customer who doesn't do his / her due diligence pays the price. Banks earn a lot of money through people not being bothered to research alternatives and look at the small print. When it comes to financial services products, not being savvy and not doing your homework usually means you'll pay for it in uncompetitive charges. Buyer beware!
Why doesn't everybody shop around?
Honestly, because people have other, more fun and important things to do.
But we have seldom encountered an easier way to stop unnecessarily wasting money than by doing your homework and selecting the right bank account for your circumstances.
Many Germans stick with the bank they have been with since they were kids, or stick with the same bank that their parents bank with. This is a country where any change is seen as a risk, and thus often viewed adversely. Change happens very slowly here. Many (not just old) people still go into branches to complete all of their money transfers.
In more rural areas, people may be more loyal to the local Sparkasse or Volksbank because of the more dense branch network available. However, even if you are based out in the sticks, seriously, how often do you need to use your branch? Is it really worth paying up to €100 per year for in completely unnecessary charges? Just go with another bank and drive to your nearest larger town for the couple of times a year you require in-branch services.
I have a mortgage, overdraft limit, credit card and stock-trading account split between the 2 banks whom I have current accounts with. I never use branch services. Last time I spoke to my personal banker was in 2009, when I arranged my mortgage.
We recommend the following bank accounts, all of which are free.
comdirect and N26 are free under any circumstances.
Commerzbank requires a monthly salary to be paid in to take advantage of a fee-free account. Therefore if your income is irregular (for example, if you're self employed) then this one is probably not for you.
Why do we recommend these 3? Because they offer a complete range of options: Something for everyone, from traditional branch network through to online bank through to App-driven banking. And all of them are free of monthly charges if you stick to their conditions.
Well, I personally have been a customer of both Commerzbank and comdirect for several years am happy with their service. If I had to choose between them though, I would choose comdirect, mainly because their fees are lower and I don't really use in-branch services.
Go with comdirect if you want more readily accessible customer service via phone and email, and / or a credit card with no annual fee. Their other fees are lower than Commerzbank and there is no minimum salary deposit as a condition for the free account.
If you want access to a nationwide branch network, then Commerzbank is pretty much your only free option out there.
N26 is a relatively new kid on the block: One of the cool kids of the Berlin start-up scene. I have my business account with them and I am happy with their service.
They have great feedback in online forums and Facebook Groups. They seem to have their customer service in tune with their target audience. Everything is accessible from their smartphone App – this is the future of banking for the more tech-savvy generation. Also, if you make regular non-EUR purchases on your credit card, this is also the best option because it is commission free.
I also wanted to recommend an alternative product to the more traditional banks, especially for those folks who may not be able to access their services for reasons mentioned below. I am conscious of the fact that not all expats in Germany have a regular, fixed income which is paid into their account by their employer.
That said, for anyone self-employed who is not a casual freelancer, I would seriously consider a business account to benefit from the obvious advantages of doing so for self-employed people and small business. There are benefits this type of account can offer for “solopreneurs” vs. the traditional Girokonto aimed at private individuals.
What to do if they don't accept my application?
There is no guarantee that your application for a German bank account will be accepted. Banks are often conservative, risk averse institutions. If you have recently arrived, don't have a job yet and have no credit history within Germany, there is definitely a possibility that they will not approve your application.
N26 are considerably more laid back around who they accept. If your circumstances mean you are not the typical average applicant, perhaps this is your best course of action, at least for the first few months until you have established yourself.
What banks are definitely not allowed to do is to discriminate based on nationality. However, they are perfectly entitled to ask your immigration / residency status (and reject you if you do not have the right to legally reside permanently in Germany).
So there you go. Variety is the spice of life and knowing your options is the key to not wasting money on unnecessary charges. If you're sitting on the fence about whether to switch your account…DO IT! It will be the easiest money you have ever saved.
Work out how much you earn per hour in your job. If an hour spent switching your German bank account is financially more lucrative than your day job, then it really is a no-brainer!
Switching German Bank Accounts Is Easier Than You Think
So, you want to switch to one of the providers we recommend? It's actually easier than you think.
Newcomers to Germany often don't choose the best account for them at first, mainly for reasons of expediency and the need to have a bank account set up quickly after relocation, usually in order to receive a salary or pay rent. Also, a common problem is not being accepted by the bank of their choice because of not having any German credit history with SCHUFA.
In the following paragraphs, we have taken a lot of information from a recent article in German consumer magazine Stiftung Warentest, June 2017 edition “Finanztest”, for those of you who understand German and would like to read their report in full.
How did you select your current bank?
When you first arrived in Germany, most likely you opened a bank account either based on what your colleagues, friends or someone in a Facebook group or expat forum advised you, or you chose the bank with a branch located conveniently close to your home or workplace.
Without a good understanding all of the different product offerings and services on offer, it is difficult to make an informed, data-driven decision.
If you lived here for a while now, and are kicking yourself for opening a German bank account with somewhere that has crappy customer service and inconvenient opening times, the good news is that switching your bank here has become easier now than ever!
“Switch Your Account In Less Than 10 Minutes!”
Really? Well, no.
A new law which came into force in September 2016 allows consumers to switch bank accounts much easier than was previously the case. Claims made by some banks' advertising that you can “switch your bank in less than 10 minutes” are, however, in our opinion, extremely optimistic.
Banks must now offer a service which automates and performs the annoying, administrative tasks which put most people off switching their banks. The law stipulates that the customer's incumbent and new bank must cooperate with each other and enable a simple and fast account switching service with easy access to recent transaction history.
Furthermore, both banks are liable for compensation if anything going wrong during the switch. However, this is only valid if it is a task which is their responsibility for carrying out on the customer's behalf during the switching process.
An example: If a direct debit is not set up properly for a contract or loan repayment and the customer incurs a penalty or interest, according to the law, then the bank must take liability (obviously this is subject to you having given them the correct details in the first instance!)
How does it work?
The infographic below walks you through the process of how to switch your bank account in Germany in 8 steps.
Everything Is Done Online
Whilst it is also possible to carry out the account switching service in branch, the law is primarily directed at consumers who would carry this out online. This online service should be free on all banks' websites.
Switching in 10 minutes may be unrealistic, especially for somebody navigating a German website with limited knowledge of the language. However, that doesn't mean the process is complicated. Even if you are dependent on a website translation tool such as Google Translate, this process from start to finish should be possible within 1 hour.
After applying for your new bank account, you then have to go to the account switching service on their website (Kontowechselservice). All banks based in Germany will offer this online. Normally this will be found in the personal banking area after you have logged into their site.
NOTE: You cannot do this until you have opened an account and your new bank has provided you with an online banking user ID.
Once you are inside the account switching service on your new bank's website, your incumbent bank must provide an overview (online, on the new bank's site, through selecting your old account's details) of all transactions from the past 13 months.
Doing this online is free of charge. What's more, many banks also offer sign-up bonuses for new customers opening current accounts, so it may just be the most productive hour you have spent in a while! The follow-up article to this one explores pros and cons of various accounts and the terms upon which you will be paid a sign-up bonus…look out for this in a couple of weeks time.
If you know which bank you want to switch your account to, and have noted down the direct debits (Lastschriften) and saved payments (Überweisungsvorlagen) from your current bank account that you need to switch across, then it is relatively straightforward. That is, if everything goes to plan…
What Could Go Wrong?
So that's the theory. There are, however, a few areas where this seemingly simple process could get stuck in the mud.
1. Direct debits vs. one-off payments: In the list of transactions from the past 13 months which your current bank is obliged to provide, any and every electronic payment will show up in here. Only you are able to know what is an important, recurring payment to be transferred to the new account e.g. rent, gym membership, internet, versus what are one-off payments e.g. groceries, petrol, meals out etc which are not relevant.
2. You need the transacting partner's address info: You must provide an address of the transacting partner for your new bank to write to them and inform them of the change in account details, in order for payments to continue uninterrupted after the switch. This is not always obvious from your bank statements, so may require some preparation in advance.
3. Issues with standing orders (Daueraufträge): According to Stiftung Warentest, regular, scheduled standing order payments are not easy to transfer using the banks' online switching service. The most simple way to do this is to manually cancel them with the current bank and set them up with the new bank.
4. Online payment providers: The likes of Ebay, Paypal and Amazon require you to amend your bank details in your profile on their website. Your new bank is not authorised to do this on your behalf.
5. (Non-)Acceptance of digital signatures: Some transacting partners may refuse to accept digital or scanned signatures. You may therefore receive correspondence asking you to confirm with an ink signature and return the letter by post.
So why don't more people switch?
Why don't most people find a new job when they don't like their boss?
Why don't most people move home when they are not happy with their apartment?
Like most things, because it's easy to maintain the status quo. There is still the common misconception that switching bank accounts is a complicated and long-winded process. Yes, it involves some preparation work in advance, and the onus is on you to figure out which is the best bank to switch to. However, I hope with this overview you now feel informed that the actual switching process itself is not specifically complicated.
Disclosure: The links for comdirect and N26 are affiliate links, meaning that Live Work Germany receives a small commission from these banks for any successful referrals we make. This does not have any bearing on the terms or prices of the accounts themselves.
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