Moving to a new country is exciting. But let’s face it, the bureaucratic hassles of registering at the Bezirksamt, setting up a phone line and opening up a bank account are not. To help you navigate the banking jungle, we surveyed six large institutions and an on-line bank to help you choose the right one for you.

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, Citibank and Stadtsparkasse (Berlinersparkasse for this survey) and one online banking institution, comdirect.de.

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.

Each of these commercial banks offers several types of checking account options (Girokonten) aimed at different target groups. The ideal one will therefore depend on whether you are a student or your professional status (employed or freelance) and your income.

Most accounts cost money, varying from €3 to €13 monthly, depending on the package that comes with it. There are a few free options but the usual rule is, 'you pay unless you have money' and these accounts often require a minimum balance or a regular amount deposited into the account.

For example, Citibank’s Citibest requires a minimal balance of €2,500 but the deposits earn 3.25 percent interest annually. If you are poor, the bank charges €9.90 a month for its special account for people with irregular or no income (Einzelabrechnungskonto) -- the highest costing at the bank.

Still, Postbank’s Girokonto Plus is free of charge if a minimum of €1,250 is deposited monthly (or a fee of €5.90 applies), the same deal with Comdirect.de with a euro monthly rebate (or a €4.90 fee applies). And Hypovereinsbank’s Willkommenskonto customers have to put away a minimum of €25 per month into a savings account that comes with the Girokonto. With Commerzbank's free account, you have to prove a monthly deposit of €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 €50 with its free Girokonto. Comdirect.de offers a BahnCard 25 with its student account. The card, which usually costs about €50, offers holders a 25 percent discount on Deutsche Bahn trains for a year.

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, Commerzbank and 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 €7.50 per withdrawal.

BerlinerSparkasse, for example, has a very dense network in Berlin, with 170 branches and 80 in the subway stations. But Citibank 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 elsewhere but they are useful to when buying that new book on Amazon or booking a flight. These days, most banks offer credit cards with bank accounts -- these are Visa and Mastercards that act like debit cards processed monthly on accounts.

Their fees vary from zero (Comdirect.de) to €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 €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 €5,900 is spent on the card annually. BerlinerSparkasse's BrilliantKonto offers the gold card for free but the account costs €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 Citibank and Postbank, whose student Girokonten provide a credit card for a minimal annual fee of €5 and €15, respectively.

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.

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.

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, interests rates start at 3.25 percent, and depending on the amount of money and the duration you plan to leave it untouched, the rate can go up to more than 4 percent. 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 €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 €8 to almost €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 Citibank.

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 €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 (Anmeldungsbescheinigung); 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.

For the accompanying survey, see: Banking in Germany: A survey of products and services

Nurhan Kocaoglu

Copyright Expatica

4 December 2007