Moving to a new country comes with learning how to handle your money, and Germany is no different. For expats, students, and anyone new to the country, knowing how the German banking system works is an important first step for managing your finances smoothly. This guide will break down important terms, services, and habits related to German banks, so you can look after your money easily and with confidence. We’ll go through everything from opening your first account to using common local payment methods, giving you the basic knowledge you need to settle in financially.
Germany’s banking system is both up-to-date and shaped by tradition. Unlike some countries where financial markets lead the way, Germany relies a lot on its banks for loans, especially for its small and medium-sized businesses (the Mittelstand). The history of Germany’s banking has built a system that puts people first and tries to protect customers rather than chase risky, high-reward products. In this guide, you’ll find practical steps on how to use the German banking system to your advantage.
German banking system guide: key facts
Germany’s banking world is well-developed and has some traits that set it apart, such as its “three-pillar” system and steady use of traditional banking, even now that digital banking is growing. Here are some main facts you should know about how banking works in Germany.
How many banks are there in Germany?
There are a lot of banks in Germany. The country has around 1,400 banks, showing how many choices there are. This group includes:
- 371 credit institutions
- 987 local cooperative banks
- 421 local savings banks
This big number, compared to other developed countries, means Germany has many small, local banks, not just a handful of big ones. There are fewer banks than before, as online banking is becoming more common, but you still have plenty of options to choose from. The system is watched over by the Deutsche Bundesbank (the central bank) and BaFin (the main financial regulator), both of which help keep banking safe and secure.
Currency and payment landscape in Germany
Germany uses the euro (€) as its currency. The euro replaced the Deutsche Mark in 2002 and is now used in 20 EU countries by more than 335 million people. Euro banknotes are €5, €10, €20, €50, €100, €200, and €500, but notes over €100 are uncommon in daily life. Coins come in 1, 2, 5, 10, 20, and 50 cents, as well as €1 and €2 coins. Each coin has a common front and a country-specific back-for example, German coins often feature the eagle, Brandenburg Gate, or an oak branch.
In everyday life, people say “cash is king” in Germany because cash is still widely used. Many smaller stores, market stalls, and some public transport only accept cash. While card payments are popular in other places, in Germany it’s normal to carry cash for small everyday expenses like buying coffee or paying for bus fare. Even though digital payment is growing, it’s best to always carry some cash to avoid trouble.
What makes German banking different?
The biggest difference is the “three-pillar” system. This includes:
- Private commercial banks
- Public savings banks (Sparkassen and Landesbanken)
- Cooperative banks (Genossenschaftsbanken)
Each pillar focuses on different customers. Private banks are major companies but do not control the market, as public and cooperative banks serve a lot of regular people. German banks are also known for careful, secure banking; they prefer simple products and look out for customers’ interests. This approach has led to fewer risky investments and a steady banking sector, but it’s also resulted in lower profits for banks and more bank mergers over the years.
Cash habits, the common use of the Girocard (EC-Karte), direct debits (Lastschrift), and standing orders (Dauerauftrag) for repeated payments all play a big part in German banking culture.
Types of banks in Germany
To understand German banking, it helps to recognize the three main types of banks that give customers many choices:
Private commercial banks
These are the large, well-known banks. Together, they hold almost half the banking assets in Germany and handle much of the international business. Example banks include Deutsche Bank and Commerzbank. They offer many services such as current accounts, loans, mortgages, and investments. Even though they are big, they must compete with the other types. Private banks usually have “International Desks” to help English-speaking customers.
Public savings banks (Sparkassen)
Public savings banks, or Sparkassen, are run by local and regional governments and handle about half of all banking transactions. Nearly every city and town has a Sparkasse, making them very easy to find. In addition to the local branches, there are also seven larger Landesbanken that manage operations at the state level. Sparkassen are trusted and put community needs first, though they may be less suited to English speakers or expats than private banks.
Cooperative banks (Genossenschaftsbanken)
These banks, with almost 1,000 branches, are owned by their customers (members) and focus on local communities, especially in smaller towns. The main examples are Volksbanken and Raiffeisenbanken. Members can have a say in how the bank is run. They offer all the usual services like accounts and loans, though they may be less focused on international clients.
Online and direct banks
Recently, online and mobile-only banks (direct banks) have become popular thanks to their convenience and low costs, often offering free basic accounts. N26 and bunq are two top choices, allowing people to open and manage accounts easily using apps, in English, without paperwork or branch visits. These banks are especially popular with expats and those comfortable with digital banking.
International and investment banks
Germany is home to many international banks, too. For example, a lot of U.S. and global banks have offices in Frankfurt, the center of German finance. Expats may find it easy to use a bank that also operates in their home country. Investment banks, like Baader Bank, focus on trading, asset management, and business clients. These add more specialized choices to the mix.
Common account types for residents and expats
When you move to Germany, knowing about the main types of accounts will help you manage your money from day one.
Current accounts (Girokonto)
The Girokonto is similar to a checking account elsewhere and is the most important bank account in Germany. This is where your salary gets paid, and it’s used for most of your daily payments and money transfers. Nearly everyone has a Girokonto. Banks offer different options, and fees can vary, so it’s smart to compare costs. Most accounts come with a Girocard (EC-Karte), the main debit card in Germany. Students may find special accounts with lower or no fees.
Savings accounts (Sparbuch or Tagesgeldkonto)
If you want to save money, you can open a Sparbuch (traditional savings account) or a Tagesgeldkonto (an easy-access savings account). Sparbuch accounts are for long-term saving and may limit how much you can withdraw at one time. Tagesgeldkonto accounts let you save money, earn a bit of interest, and take money out whenever you need it. These accounts aren’t for everyday spending and usually don’t come with debit cards.
Blocked accounts (Sperrkonto) for students
Non-EU students or residents often need a Sperrkonto (blocked account) to get a visa. You must deposit enough money to cover living costs for at least a year; the money is then released in fixed monthly amounts. This account’s main purpose is to meet visa requirements, not everyday spending. Some banks have packages that include both a blocked account and a usual bank account for convenience.
Joint accounts (Gemeinschaftskonto)
A joint account lets two or more people share an account. This is good for couples, roommates, or anyone with shared bills. Each person gets their own card, and everyone can see what is spent. You can set these up for everyday spending or saving towards a shared goal, but it’s sensible to discuss expectations openly first.
What do I need to open a bank account in Germany?
Opening your first bank account in Germany is an important task and having everything ready will help you avoid problems. Requirements can change depending on your nationality and the bank you choose.
What documents do you need?
To open a bank account at a regular bank, you usually need:
- Your passport
- Proof of address (Meldebescheinigung from the local registration office, a rental contract, or a utility bill)
- For employees: a work contract or recent payslips
- For students: a university enrollment letter
Sometimes, you may be asked for a first deposit, but most banks don’t require this. Having these documents ready will make the process faster.
Extra notes for non-EU nationals
If you’re from outside the EU, you might need to show your German visa or residence permit. Some online banks will let you open an account first, then give you a short time to provide the permit. For international students, a blocked account is usually required. Make sure your documents are complete before starting to open an account. Many banks now have English-speaking staff or language options for expats.
Opening an account online or in person
You can open a German bank account either at a branch or online. If you go in person, you get to speak with staff, which can be helpful if you want advice, but you will need to work with the bank’s opening hours and may need an appointment. The paperwork may also take longer, especially with a language barrier.
Opening an account online, especially with direct banks like N26 or bunq, tends to be faster and simpler. After uploading scanned copies of your documents and verifying your identity (usually with a video call or by visiting a Post office), you can normally finish everything within minutes. These banks often have English-language support, which is useful for newcomers. Traditional banks might offer more options for credit or overdraft, though direct banks are best for simpler needs and basic online banking.
German banking terms to know
Getting to know common banking words will help you use the German system much more easily.
Girocard (EC-Karte) and debit cards
The Girocard, also known as the EC-Karte, is the usual debit card in Germany. When you get a Girokonto, you’ll get this card. You can pay in most stores, gas stations, and supermarkets, and you can take cash from ATMs. Payments are made by using your PIN. Some Girocards have a chip you can load with a small amount of cash for fast payments in places like parking garages. Cards with Maestro or V-Pay logos can be used outside Germany, but most payments are made locally using the Girocard.
Credit cards and how they are used
Although credit cards (Mastercard, Visa) are easier to get than before, Germans mainly use debit cards for daily shopping. Credit cards are mostly used for online shopping, bigger expenses, or when traveling abroad. American Express is less common, so it’s better to have another option. Most banks offer credit cards, with fees ranging from free to over €100 a year. Banks set lower credit limits than in some other countries, and a proven credit history is needed for bigger limits. Prepaid cards are also available for those who want to control their spending and avoid debt.
Standing orders (Dauerauftrag) and direct debits (Lastschrift)
Both these payment types help you pay bills automatically:
- Dauerauftrag (Standing order): You tell your bank to pay a set amount at regular times. This is good for fixed payments like rent or insurance.
- Lastschrift (Direct debit): The company you’re paying (like a utility provider) takes the amount you owe each month straight from your account. This is often used for bills that change each month. You can reverse any direct debit within 90 days if needed.
Bank statement (Kontoauszug)
A Kontoauszug is your regular account statement, showing all payments in and out for a specific period. You can get it at bank self-service terminals, by mail, or most commonly now, from your bank’s app or online site. Check your bank statements often to spot mistakes or fraud, and remember that official paperwork like this is often needed for applying for visas or renting apartments.
Account switching service (Kontowechsel-Service)
If you want to change banks, the Kontowechsel-Service helps by moving all your regular payments (like direct debits and standing orders) from your old account to your new one. Your new bank usually notifies your payment partners for you. Still, check your old account for a while to make sure everything has been switched over properly.
Payment methods in Germany: what to expect
Knowing how people pay for things in Germany will help you avoid surprises each day.
Cash and card payments
“Cash is king” remains true, especially for small purchases. Many places, such as bakeries, market stalls, or some transport ticket machines, accept only cash. For larger stores and city shopping, you can use cards, but outside big cities, always have some euros on hand. Most shops that take cards accept Girocard. Credit cards like Visa and Mastercard are sometimes accepted, but less so in small shops and with American Express. Always look for card symbols at the register, or ask, “Kann ich mit Karte zahlen?” (Can I pay by card?).
Online and mobile payment options
Mobile payments are becoming more common, but aren’t yet standard everywhere. Debit and credit cards are most used for shopping online. PayPal is very popular for online shopping. Google Pay, Apple Pay, and bank apps are growing in use for mobile or contactless payments, especially in bigger cities and at larger stores. Many direct banks allow instant transfers and work well with these mobile options.
Bank transfers (Überweisung) and SEPA
Banks transfers, or Überweisungen, are a common way to send or receive money. You use these for one-time payments, like paying a bill or sending money to someone’s account. To do a transfer you need the recipient’s IBAN, and, sometimes, the BIC. Due to SEPA, transfers within Germany or to other eurozone countries are just as easy and usually cost the same as in-country payments. Most arrive in a day or two.
International money transfers
Sending money outside the eurozone, like to the US or Asia, can cost more and takes a bit longer. You’ll need the recipient’s IBAN and SWIFT/BIC code. German banks can send international transfers, but many expats use services like Wise, which are often faster and charge less. These services are simple to use online and make sure your money ends up in the right place.
Banking fees, security, and fraud protection
Knowing what banking costs to expect, and how your money is kept safe, is important when managing your finances in Germany.
Usual account and transaction fees
While some banks offer free accounts (mainly online banks or youth/student accounts), most banks charge for their services. Monthly fees for current accounts can range from zero to €5 or more. It’s good to check for other charges, like ATM withdrawals, international transfers, or credit card fees. Overdrafts (going into the red) can be expensive, with interest rates from 4% to 18% a year, so watch your balance closely.
ATM access and withdrawal costs
ATMs (Geldautomaten) are everywhere in Germany. Withdrawing money from your own bank’s machines, or those in its network, is usually free. However, if you use another bank’s ATM, you may have to pay a fee (from €1 to €10). Always check at the ATM before taking out cash. Some online banks allow a certain number of free withdrawals each month, no matter which ATM you use.
How banks guard against fraud
German banks use strong security to protect against fraud. Most now require more than just a password-they may use fingerprints, facial recognition, or send a special code (TAN) to your phone for extra safety with online transactions. To stay safe, don’t click suspicious links, never share your password or PIN, and make sure you only use secure payment sites. If you notice anything odd in your account, contact your bank at once.
If your bank card is lost or stolen
If your card is lost or stolen, act quickly:
- Block your card by calling your bank or the central emergency number 116 116 (works for most German cards).
- For Girocard, you can also call 01805 021 021.
- Report the loss to the police, especially if theft is suspected; you may need their report for insurance or to dispute wrong charges.
- The bank will send you a new card soon after.
How to choose the right bank in Germany
The right German bank for you depends on what you need most. Here’s how to narrow down your options.
Comparing services and fees
All banks charge different fees and offer different services. Think about what matters most to you-low fees, English-speaking staff, a good app, a large ATM network, or international services. Some banks offer free accounts if you deposit a certain amount each month or if you are a student. It’s helpful to use banks’ websites to compare costs, services, and reviews before choosing.
Changing banks
If you’re unhappy with your bank, you can switch easily. The account switching service (Kontowechsel-Service) helps by moving all your regular payments and informing anyone who pays you or takes money out of your account. Still, watch your old account for a few months to make sure nothing is missed.
Good banks for expats and students
Some banks are especially suitable for newcomers. Online banks like N26 and bunq are popular because you can open an account quickly in English using your mobile phone. They also offer free basic accounts and easy money transfers in other currencies. Among regular banks, Commerzbank is a solid choice for students and offers accounts without fees for those under 30. Postbank is another option with a mix of physical branches and a good app. Your choice depends on whether you need an in-person experience or like handling everything digitally.
Useful resources for getting started with German banking
Even with the right guide, getting used to German banking takes time. Here are some resources that can help you as you settle in.
Consumer advice and ombudsman services
If you have a problem with your bank, first contact their customer service. Most banks have ways to file complaints. If you don’t get a solution, you can go to the independent Financial Ombudsman, overseen by BaFin, who can help resolve the issue for free. You may have to pay for postage, but the process is set up so you don’t need to hire a lawyer. If you’re still unsatisfied after this, you can go to court-but most issues are settled earlier.
Other help for newcomers
There are many expat-focused websites, forums, and online groups where you can ask questions and read about other people’s experiences with banking in Germany. Some banks also have special services for English speakers and offer information and tools to help you budget and manage your account. Keeping your documents in order and knowing some basic banking terms in German will make things even easier.
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