Expats who plan to stay in Germany for more than 3 months would benefit from opening a bank account with a German bank. It is not necessary to have a German bank account for your day-to-day transactions. However, it is practical to have a local account to conduct recurring payments such as rent and bills (e.g., the internet, electricity, heating, etc.).
Of course, if you work in a German company, your employer will ask you for a German bank account to deposit your salary. The requirements change depending on which bank you go with, but overall, it's pretty straightforward, and you have many banks to choose from.
Expats' requirements to open a bank account in Germany
Your passport, residence permit, and accommodation contract are mandatory documents to open a bank account in Germany. If you study in Germany, you can open a student account as long as you can provide a letter from your higher education institution stating you are a registered student. If you opt for a bank account with an overdraft (Dispositionskredit), the bank may ask you to show your employment contract or payslips as proof of your earnings. Also, some banks may ask for a document called “Anmeldung”, an address registration certificate. However, this can be tricky since some house owners won't rent their estates to expats who don't have a German bank account. To get around this obstacle, search for banks that cater to expats or find accommodation in Germany that allows Anmeldung.
If you come from a country whose currency isn't the euro, there are many benefits of having a German bank account, such as a free euro account. A good understanding of the processes and banks will help you easily organize your accounts and savings for all your future financial plans in Germany.
Choosing a bank in Germany
The German banking system is divided into three parts: private banks such as Commerzbank and Deutsche Bank, cooperative banks such as Volksbanken Raiffeisenbanken, and public banks, which aren't necessarily 100 percent publicly owned.
When choosing your future bank in Germany, you should research the following:
- Monthly service fees ranging from free of charge (at least for the first months) to 15 euros per month, depending on the type of account;
- Transaction fees for international transactions, especially to/from your home country;
- Local availability of ATMs. Most banks are part of ATM networks and may charge you for withdrawing cash from a different ATM group. For example, the four most prominent private banks (Commerzbank, Deutsche Bank, Hypovereinsbank, and Postbank) are part of Cash Group, and you may be charged up to 5 euros per withdrawal when using an ATM that is not part of their network.
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Transaction and ATM fees include exchange rate fees, local charges, and home bank charges.
Mobile banking is increasingly becoming more popular, especially among seasoned expats. As with every online service, mobile banking has its pros and cons. On the one hand, it is convenient to manage your money and keep track of your balance via an app on your phone, and most importantly, transfer funds instantly. On the other hand, one has to be careful of online fraud and internet scams. Some of the most well-known and trustworthy mobile banks in Germany are DKB and N26. These banks have no physical offices, but you won't need them anyway because of their 24/7 online customer service. Even the opening of your account will take place online.
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Types of bank accounts in Germany
Banks in Germany offer different types of personal accounts:
- Girokonto (current);
- Sparkonto (standard saving);
- Tagesgeldkonto (overnight or call money account).
Girokonto is usually used for salary deposits and daily transactions, whereas a Sparkonto account is designed to put money into the account and earn interest on this money as long as it is not withdrawn. Note that withdrawals from a savings account may lead to additional charges. Tagesgeldkonto is merely used as a form of investment. In other words, in this account, you deposit money that you don't intend to use soon, and you want to earn interest on this money while keeping it safe.
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It is worth comparing different bank accounts as conditions vary widely, as well as basic fees, interest rates, overdraft and transaction fees, etc.
Depending on your account, you will get a different type of card:
- Electronic Cash (EC) Card/Girocard is a debit card that is attached to your account for direct payments and ATM withdrawals but doesn't have a 16-digit number for other payments, such as online shopping. Some banks in Germany don't issue you with a Girocard, and some shops and businesses only accept Girocard, so it's worth having extra cash on you just in case;
- Kreditkarte Visa, Maestro, and Mastercard are 16-digit debit cards connected to your account, which you can use for all payments and withdrawals, as well as online purchases;
- “Kreditkarte” Credit Card has a credit limit that usually gets billed automatically.
Debit cards are accepted in most shops and ATMs (known by the name Geldautomat) available at airports, petrol stations, and shopping malls. However, you will notice that the regional availability of ATMs varies a lot in Germany. For instance, a bank with plenty of ATMs in Frankfurt may not be an option near Lake Constance.
Cards and electronic payments in Germany
Before the COVID-19 pandemic, Germans were paying in cash for restaurant meals and groceries “twice as often as the European average”, and they would use their card only when a transaction amounted to more than 50 euros. Since the pandemic, debit card use and electronic payments may have become a more common way of payment, but Germans still use cash a lot more than other countries, and some businesses are still cash only. Germans have been loyal to physical money throughout history, and when the concept became too abstract for them (e.g., stocks, shares, cards), Germans were suspicious.
Credit cards are used for online payments but not in physical shops. Moreover, credit cards are more difficult to obtain, and for a bank to issue a credit card, a credit check is required (SCHUFA). The process closely examines the applicant's current financial circumstances and financial history in order to establish whether they are a reliable client for the bank and able to meet their financial obligations in the future (creditworthiness). Hence, depending on the bank institute, you may have to wait a few months until you are granted a credit card with a relatively low limit that will gradually increase as per the cardholder's financial behavior.
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To establish your creditworthiness, the bank will want to know what assets you have, the type of work you do, the amount of salary you earn, family obligations, and previous behavior with credit cards and loans.
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EU–EEA citizens can use their international credit card in most German shops without commission or bank fees. However, bank fees may apply if you withdraw cash from ATMs.
Opening a business account as an expat
Setting up a business in Germany will also require opening a business bank account after you have registered your business with the German tax authorities (Finanzamt) and received your tax ID (Steuernummer). The required documents for a business account include a passport, German address registration, and tax ID number. Please note that the requirements may differ for non-EU–EEA citizens. Once you have the business bank account opened, you will be able to start organizing your business accounting, use online banking or the mobile app for business transactions, and set up your business's standing orders so you never miss a payment deadline, including employees' payments.
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A bank can verify your identity remotely via PostIdent or VideoIdent. In the first case, you visit your local Deutsche Post branch with your passport or ID, and in the second case, you organize a call with the bank and answer the call through a device that has a camera.
If you aren't sure which business bank account to select, consider the following when making a decision:
- Monthly account maintenance fee – the higher the fee, the more features your account offers. However, this doesn't necessarily mean these features are helpful to your business;
- Transaction fees and other charges may not be that obvious at the beginning. For instance, do you have to pay for cash withdrawals and other everyday transactions? Also, how much are the currency conversion fees if your business is taking place in many currencies?
- If you have partners, enquire about how many users can be under the same business bank account and how many debit cards you can obtain.
- How easy is it to switch accounts or break the contract with the bank if you are not satisfied?
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Freelancers in Germany don't have to open a business bank account, but it may still be worth considering separating your personal bank account from your professional account to make bookkeeping and tax management easier.
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