Banking in Germany is similar to American banking, in that both countries use money, and that’s where the similarities end.
No in reality, banking isn’t 100% different in the client facing side though behind the scenes the systems are quite different. I do find some of the common procedures to be a bit slower and more tedious than I’m used to, but I think that’s generally true of anything that is a system here. It’s not uncommon knowledge that Germany is resistant to credit cards, debt and trusting data online. The online banking system I use I find has unnecessary security measures, but after three years it’s second nature*.
Europe also doesn’t use checks, or they don’t anymore, which that right there I will happily exchange for a bunch of hoops to jump through to pay bills online. The debit system here is much faster than ours and I think it’s also more secure.
*Big change since this article: I completely switched banks and while signup was a bit of an adventure, I've been really happy with the service for the last two years.
A special issue which affects only Americans is the reluctance on the part of German banks to work with them because of some special American financial laws, in particular the family of regulations within FACTA. The laws themselves had good intentions, to better track and stop illegal financial activity which in the past was hidden in banking networks and multi-chain transactions, but they also don’t discriminate among an average expat living abroad and a criminal when it comes to auditing accounts. Therefore, you need to keep your paperwork in order.
If you’re curious about the various regulations, look here.
In a nutshell, foreign banks are required to report to the IRS every year with statements on the transactions and amounts of bank accounts held by Americans. If they don’t, the penalties could include the US withholding 30% of the bank’s American assets, either in the foreign country or the US itself. This discourages some banks from working with Americans altogether. I wouldn’t blanket statement say which banks are more hesitant than others as it could also depend on the branch you try to work with. I do have a bank recommendation in Wiesbaden however and I will be using their system for examples of terminology and processes.
FACTA hasn’t always been around, these rules are pretty recent. They went into effect pretty much almost as soon as I arrived here. Therefore there wasn’t a lot of guidance on how to comply with the law and obtain a German bank account. In the last few years then more banks are more prepared to work with Americans and I would imagine there’s greater willingness or, at the least, understanding of the special circumstances.
You are also required to report your income and holdings to the IRS. This is not something your German bank is going to assist you with so find a tax accountant.
How do I get a bank account then?
Personally, I like the really boring paperwork and rules and systems part of life. I actually look forward to tax season and the chance to put life in order and neatly file records away. Therefore these various administrative challenges of immigration and setting up a new life have been more on the exciting side and not so much something I was dreading. Getting a new bank account was something I was looking forward to as well, because 1) I would get to talk to people, and I like doing things in person sometimes and 2) I’ve never had any exposure to another country’s financial system in practice, so new opportunities and experience were ahead!
If you want basic checking, you want the Girokonto. There are plenty of basic options available and it will come with the Girocard / EC Card. Occasionally you may be able to use this card outside Germany if you see the Girocard logo. Basic savings accounts are also available, they are called Tagesgeldkonto and have the same dismal savings rate the US does right now.
How do I start?
Pick a bank. I will be talking about CommerzBank* for this post because they are who we use and we’ve been really happy with them. Plus, there was only the slightest of hesitations when I visited in person and explained my situation. In addition, if your German isn’t the best, their site has slowly been improving in the English version to the point that today, one shouldn’t have any trouble using it for the basics even with a lack of German. Correspondence is in German but the bankers I’ve worked with have great English for when you’re just starting out and haven’t built up your financial vocabulary yet.
*If it turns out Commerz no longer works with Americans due to the financial regulations or they aren’t the best for your situation, I still think this post will be helpful in a generic sense, no matter which bank you choose.
Documents
I think the list of documents required for just about every legal or financial task you will encounter in Germany is going to be roughly the same. Therefore, you can probably just pull out your folder from when you registered at the Bürgerbüro for Anmeldung.
You cannot get a German bank account until you have a registered German address.
- Meldungbescheinigung (from Anmeldung)
- Proof of income (some banks charge fees if income is under a certain threshold)
- Passport (with visa, if needed (non EU citizens))
The bank is going to give you, in return, a W9 form* which you should be familiar with from previous employment back in the states. It’s possible you will take this form home with you the day you set up your account, in which case you will need to complete it there in office, mail it in or bring it back later (but soon, because the bank will absolutely require this completed form ASAP since they will face penalties if they don’t have it). It’s also possible, as it happened in our case, that a pre-filled out form will be mailed to you, waiting your signature and perhaps one or two lines of personal information.
*If you are not American, the W9 will obviously not apply to you. If you are American, and you don’t receive one, you absolutely need to download and fill it out yourself and give it to the bank.
During the appointment, it will feel pretty much like setting up a bank account anywhere else. I’ve only set up one or two in person in the states, since normally all of this could and would be done online, or via mail, which is one of the reasons I feel German banking is old fashioned. The banker will give you a contract, with many, many places to sign*, a booklet or folder of information on the account and additional products you may be eligible for, and they will ask you about setting up online banking.
*If you are opening a joint account, you need the other person present with you.
A Note on Credit Cards
Credit cards in Germany are generally charge cards, not the classic monthly balance revolving type. This means the total amount you spend on your card each month is automatically debited in full at the end of the billing cycle. They almost always have yearly fees to use them and rewards cards are not common, if ever found.
TAN
A TAN is actually sun damage so wear sunscreen is a Transaction Authorization Number and is a system which seems to be in use mostly in Europe, and probably mostly in Germany in particular. There were and are many ways to utilize TAN but with everyone having smartphones now, mobileTAN versions are more popular and photoTAN is the most modern.
TAN systems are used in a variety of processes, so make sure if you choose mobile banking you don’t mix up your banking TAN with say, the health insurance TAN (you won’t, the systems or totally different, my point here is TAN is not just for banking or vice versa, it’s an authentication system).
TANs can be either fancy looking QR-codes, actual QR codes, a series of numbers which come via SMS or push notifications in apps.
You can use CommerzBank’s online system to see transaction information, confidential notices, etc. but you cannot use SEPA transfers without the photoTAN or mobileTAN system.
So, to get online banking and photoTAN working (at Commerz specifically, other banks are similar):
- Ask your banker to enroll you in online banking
- Specify you want to use photoTAN for online transfers
- Your banker will give you your username (Benutzername)
- Or you might have the username mailed to you separately
- Wait for the letter with your PIN to arrive (Geheimzahl)
- Once you have this and login with your username, you now have online banking activated
- Wait for the letter with the activation code for mobileTAN to arrive, a few days later
- Go online and find the “TAN Activation” tab and check the box (or however the bank you choose displays this information)
- At this point you could use the mobileTAN, which is receiving TANs via SMS. I have not used this system in banking.
- A few days after this, you will receive an activation letter for photoTAN and it will include the activation image
Spending Money
Online transfers are going to be your friend when it comes to recurring payments, just like in the states, but the actual system itself is different. There’s a chance your credit card won’t be accepted everywhere, but your Giro card might. And finally, get used to having cash at all times, at least 50 € per week.
SEPA
SEPA (Single Euro Payments Area) is the system for transferring money within EU countries which use the Euro (and for a few others which don’t*). It’s a quick, almost instant process which is exactly the point of the system, to be able to move one currency through several countries easily, thus faster profits and higher GDPs. This allows better freedom of movement for workers, for companies to pay these workers no matter where they’re located, and it ensures that a person using Euro in Germany can pay a person in Austria, electronically, with no fees and no (or very minimal) time delays.
*For countries which don’t use the Euro, there are national frameworks which work with SEPA as mediaries to transfer payments in different currencies which will still comply with SEPA regulations.
This is all done with an IBAN (International Bank Account Number) account. The US still uses SWIFT as the primary framework for numbering and registering accounts, which IBAN is also in compliance with, but it should be noted IBAN is no longer only European as other regions of the world are starting to adopt it. US banks and account holders within do not have IBANs at all, since the system is not recognized there, but international payments can still be made using IBAN if your bank supports it.
Therefore if you get a German bank account, you are already included in the IBAN system and no further adjustments are needed and it is possible you can still transfer money between your American bank and your German bank.
In the end, SWIFT codes correspond to the bank being identified, and IBAN corresponds to the individual account holder.
IBANs have two elements which are the same in every country: the first two digits are the country code and the next two are the check code, the last digits are country specific components. A maximum of 27 digits or letters are used within Europe, and a maximum of 34 outside of Europe. Germany uses 22 in total.
Paying rent, utilities, internet etc. can all be done with recurring transfers and is the easiest way to stay on top of bills. Setting up the transfer requires one TAN authorization for the duration of the order (until you stop the automatic payments).
Giro / EC Cards
This card is attached to your Girokonto and acts like a traditional debit card. The differences are 1) it’s not backed by a big international network, MaestroCard (which is owned by MasterCard, but not worldwide) runs the system and 2) EC (electronic cash) is not the same as debiting with Visa or MasterCard, and therefore requires the GIRO card. However as stated above, it’s possible to use these at some European locations other than Germany. This card will always require a PIN (Geheimzahl) to be set up with it and used for each transaction.
If you tell the waiter or waitress at a restaurant “I would like to pay by card” make sure you specify which card, as some will only accept EC but others could take any credit card.
ATM | Geldautomat
Generally if you see an ATM inside a bank or inside an entryway, you need to look for a card reader somewhere outside the door. This is to prevent long term stays in protected entryways. Any debit or Giro card is accepted by these readers, as long as the Visa, MasterCard or EC logos are present, choose the corresponding card. A lot of the ATMs have the option to change into English.
And if you see “Bank Terminal” machines near the ATMs, know that these are not ATMs but more like special computers only for customers of that bank to print out statements, complete online transfers, etc. There is no money being exchanged in or out of them.
Anything Else?
- The US debit card is not the same as the European EC card. They are not interchangeable systems. Look for Visa or MasterCard signs if you wish to pay with your debit card.
- While Germany is a modern banking country, credit cards aren’t widely accepted in stores and restaurants, especially out in the country. Carry cash.
- Currency exchange kiosks at the airports are no longer the only way (or best way) to exchange money. The better way to take out local cash is with your bank’s card using a local ATM. This will always get you a better deal on the exchange rate, especially if your cards doesn’t have foreign transaction fees attached to it. If using your Girocard, try to stay within the network as the fees are quite high (I’ve seen 5 Euro per transaction).
- Speaking of fees, when paying with a credit card it’s best to pay in the local currency, not your card’s. This is because you may pay two fees here:
- Any fees assessed by your bank to convert (get a card which does not do this, they are out there) and
- A fee from the transaction provider who the store contracts with in order to use international credit cards. This fee could be as high as 3% in most areas, and with bank fees around the same, that’s a 6% tax on your item.
- And finally, that transaction provider is probably providing a much closer-to-current market rate for exchanges than what your bank will.
- When depositing cash into your German account, you don’t need a deposit form or envelope. You can even deposit coins. I think this is pretty cool.
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