Moving to a new country is exciting. But let's face it, the bureaucratic hassles of registering at the Einwohnermeldeamt, setting up a phone line and opening up a bank account are not.

There are over 2,500 commercial banking institutions in Germany today each offering a variety of banking options at around 45,000 branches. That alone makes it hard to know where to begin.

To keep things simple, we surveyed six large, popular and longstanding commercial banks -- Deutsche Bank, Commerzbank, HypoVereinsbank, Postbank, which was acquired by Deutsche Bank in 2010, Targobank (formerly Citibank) and Stadtsparkasse (Berlinersparkasse for this survey) and one online banking institution, comdirect.de, which is a subsidiary of Commerzbank operating as a direct online bank.

This is in no way a complete guide on everything there is to know about banking in Germany. We also would like to caution you to beware of discrepancies in the information that you may receive from a bank representative or a bank's hotline. For example, during the research of this article, we often received different answers from different people at the same institution regarding a particular question.

In fact, when we went back to resolve these discrepancies, representatives from the bank often lacked knowledge on their products. Sometimes, they even became frustrated and hung up on our researchers. As a result, the information we are offering on banks' products and services has been verified by at least two bank officials in the past month.

Particularly for foreigners, opting for one of the larger and more popular banks may be the wiser choice. These banks have more experience working with foreign customers as well as with foreign banks and are often more accessible.

For example, Targobank’s Aktiv-Konto is free with a minimum monthly income of EUR 600, otherwise fees of EUR 4.90 per month apply.

Still, Postbank’s Giro Plus is free of charge if a minimum of EUR 1,000 is deposited monthly (or a fee of EUR 5.90 applies). Comdirect.de offers a free monthly service. And Hypovereinsbank’s Willkommenskonto customers have to put away a minimum of EUR 25 per month into a savings account that comes with the Girokonto with 0.7 percent interest for up to EUR 1500. With Commerzbank's free account, which comes with a 50 EUR welcome bonus for new customers, you have to prove a monthly deposit of EUR 1,200.

Each bank offers at least one type of account for students, which varies greatly in the services that come with it. The good news is that almost all student accounts are free. The bad news: certain limitations on the type of services exist as well as age restrictions, usually 29. And be prepared to show proof (Studentenausweis).

Finally, some banks offer perks to get customers to sign up. Commerzbank offers EUR 50 with its free Girokonto. So does its online subsidiary Comdirect.de – and if you are unsatisfied with the service, Comdirect.de pays you EUR 100.

Withdrawals

Getting an account is one thing but being able to use it effectively -- and cheaply -- is another. Banks will issue you a service card to be able to withdraw money. In general, this will be an EC/Maestro card, which allows you to pay stores and restaurants in lieu of cash on the international network.

Be sure of what you get when signing up for an account as the cheapest BerlinerSparkasse account only comes with a service card. And though five of the banks offer student accounts with an EC card (girocard-Maestro Card), Berlinersparkasse only offer a service card.

Even though all cards work at all local ATMs, how easy it is to withdraw cash for free varies on the bank. This is important because using ATMs at banks that don't belong to your network can cost up to EUR 7.50 per withdrawal.

BerlinerSparkasse, for example, has a very dense network in Berlin, with 170 branches and 80 in the subway stations. But Targobank only has 26 branches in Berlin plus a few extra cash points at minor banks belonging to the Cashpool network.

Also important to know is that Commerzbank, Deutsche Bank, HypoVereinsbank and Postbank are part of the Cash Group network and all these banks' customers can withdraw money free – that also includes Comdirect.de customers. Each of these banks also has alliances with banks outside of Germany.

HypoVereinsbank is part of UniCredit, which has over 10,000 ATMs in 15 European countries allowing for free withdrawals. Commerzbank customers, on the other hand, can withdraw from Deutsche Bank ATMs in Italy and Spain and Deutsche Bank customers can also withdraw from Barclay Bank in the U.K., Scotia Bank in Canada and Bank of America in the US at no additional fee.

Credit cards

Credit cards may not be accepted as often in Germany as in the US, however, they are still widely accepted and are also very common for online shopping. These days, most banks offer credit cards with bank accounts -- these are Visa and Mastercards that act like debit cards and which are processed either monthly on accounts or directly on a bank account within a few days (e.g. comdirect).

Their fees vary from zero (Comdirect, Postbank on first year or Barclays Card) to EUR 30 annually and usually, the free cards come from the more expensive accounts. For example, Postbank offers a free credit card with its base account free for one year but if you have the Extra account requiring a EUR 3,000 monthly deposit, then it is free.

Some accounts offer the possibility of upgrading to a Gold card for an additional fee that comes with extra perks such as car insurance on car rentals. The Girokonten with higher monthly fees do in some cases even offer the Gold card free. Commerzbank, for example, offers a credit card at no annual fee if EUR 5,900 is spent on the card annually. BerlinerSparkasse's BrilliantKonto offers the gold card for free but the account costs EUR 13 monthly.

Not all student accounts offer a credit card. If this is something important to you, check out Comdirect.de which offers a free Visa card or Targobank and Postbank, whose student Girokonten provide a credit card for a minimal annual fee of EUR 5 and EUR 15, respectively. American Express cards can be ordered directly from their website.

For students who aren’t eligible for credit cards in Germany, here is something to look out for. Giropay is an online ecommerce payment service and is now available in Germany where customers can use their Giro account number to make payments. So far only Postbank and the Stadtsparkasse are members. You can check if your branch or banking institution has become a member on the German Giropay website.

If your bank does not offer the right credit card solution there is also the option to apply for a credit card directly online at credit card issuers such as Barclaycard, American Epxressor companies that offer loyalty programs such as Lufthansa Miles and More Visa Card.

Overdrafts

Another important factor you may want to consider is how much you can overdraw your account. If you have a regular monthly income, most banks give you an overdraft of two to three times your monthly pay. This is also possible on the student accounts if there is a regular incoming stipend or even a regular monthly allowance from your parents. However, double-check this regarding student accounts.

 In general it is not recommended to make us of this option, as interest rates for overdrafts usually range between 15-19 percent p.a.

Savings and earnings

If an additional interest-earning savings account doesn’t automatically come with a Girokonto, you can sign up for one. And there are many options. Generally, interest rates are in direct correlation to the base rate that is set by the ECB (European Central Bank). The current base rate is 1 percent which gives banks the leeway to create offers such as Norisbank’s current 1.1 percent interest rate (subject to frequent change). If you want to make more out of your money, each bank also offers various investment options. But this is a big topic in its own right. Just make sure that when choosing your bank, you feel comfortable with the representative you are dealing with and trust their advice.

Transferring money

Once you have set up an account in Germany you may still need to transfer money to your home country account. The rates at your bank may be more reasonable than using an external service. Transferring funds to EU countries plus Norway, Iceland and Liechtenstein -- if the receiving bank has an IBAN number -- is free. Outside of Europe, the fees depend on the amount transferred and to where.

We asked banks what it cost to transfer EUR 5,000. The rates assume that you, the sender, cover all costs even though splitting transfer costs are also possible at most banks. Most banks have either a flat fee or after a certain amount, begin using a specific percentage rate to calculate the fee. Furthermore, the amounts do not include charges for currency conversion or additional fees the receiving bank may apply. Therefore, please make a note that these amounts may not be final. Still, we found a striking range of rates from as low as EUR 8 to almost EUR 40.

English service

It is not always easy to deal with financial transactions in a foreign language. As a result, we tried to explore whether customers at major German banks could receive customer service in English. All banks surveyed here swore that this was not a problem and said they even provide written materials on their products in English. However, we still recommend that you visit the branch of the bank you choose to make sure that a representative with solid English works there.

When it comes to a bank's hotline, each of the banks offers a telephone representative who can help you in English. Deutsch Bank’s hotline warned, however, that even if its representatives speak English that they are not trained in English.

And although online banking is part of each of these accounts, it is not widely available in English with the exception of Deutsche Bank and Targobank.

Finally, Commerzbank advertises a special international counter at its Potsdamerstr. 125 branch in Berlin, specializing in expatriate accounts. But beware: one American with a regular monthly income was forced to keep a EUR 1,000 as a minimum bank balance. "Collateral," she was told, against foreigners leaving the country owing the bank money.

And finally…

Before you head to a bank to open up a Girokonto, make sure that you bring the following: your passport with a valid visa (depending on your citizenship); documents proving you are a student, on a fellowship or an employee, your proof of registration (Meldebescheinigung); and depending on the type of Girokonto you want, the bank may also ask for your last three pay stubs for proof of income. If you are just starting a new job, a letter from your employer listing your salary should be enough. Some banks like SpardaBank or Norisbank do not require a salary statement of a salary for opening a bank account.


Nurhan Kocaoglu

Updated 23 March 2011 by Marco Dilenge, Regional Marketing Manager – Continental Europe, Crown Worldwide Group.
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