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Stand:updated on 24.11.2023 Current accounts

Almost everyone needs a current account (Girokonto) in order to receive credit transfers and make cashless payments.

What is the purpose of a current account?

You will need a current account to make and receive cashless payments and to conduct numerous other banking transactions. Wages or other income, such as pensions or maintenance and support payments, are normally paid into this account. You can also use it to pay your bills by bank transfer, standing order or direct debit, or to transfer money to other accounts. If you need cash, you can make a withdrawal from your current account. In addition, you can nominate your current account as your reference account for credit cards, securities transactions or loans, or have money from your savings paid into the account.

A current account is less suitable for investment or savings purposes because you will not receive much (if any) interest on your balance. Remember that interest on funds held in your current account is regarded as investment income and is thus taxable.

Is there any kind of protection for the money held in my current account?

In Germany, the statutory deposit guarantee schema protects current account balances and other customer deposits up to 100,000 euros per customer and bank in total. This also applies if you are a customer of a German branch of a foreign bank or of a German branch of banks from another EU or EEA member state. The deposit guarantee is similarly regulated for banks in other member states by way of an EU Directive.

For amounts in excess of this, in Germany the voluntary deposit guarantee schemes of the various banking associations may offer protection. We strongly advise that you make your own enquiries in order to avoid any risks. You should also think carefully before opening a current account with a provider outside the European Union due to the insolvency risk.

How much money can I withdraw from my account?

There are usually limits on daily withdrawals via ATMs. Depending on your bank, the threshold may be 500 or 1,000 euros, or perhaps more. Weekly limits may also apply. These limits are particularly important if your account is held with a direct bank: it may not be possible to withdraw large amounts from your account if your bank is not partnered with any branch banks. The same applies to making cash deposits. In principle, you may use any bank or savings bank branch to make cash deposits into your account, but you will often be charged a fee. In any case, you should ask your bank about the limits on your girocard.

Can I overdraw my account?

You and your bank can agree an arranged overdraft, which will allow you to overdraw your account up to a certain amount. The amount of your arranged overdraft will depend on how much money is regularly paid into the account and, above all, on your wages. Account holders are not automatically entitled to an arranged overdraft. Interest rates on arranged overdrafts are variable and can be changed by the bank at any time. Ask your bank about the current interest rate to avoid unpleasant surprises.

Remember that arranged overdrafts are the most expensive way to borrow money. You should use them only for covering short-term liquidity needs, if at all. If you need more money and you know that you cannot quickly repay the amount, you should consider other options. An instalment loan is usually a better choice.

The advantage of an arranged overdraft is that you may use it at any time up to the limit. When you make use of your overdraft, you accept the loan offer made by the bank and enter into a loan agreement.

An unarranged overdraft is an overdraft which exceeds the limit for the arranged overdraft. In contrast to an arranged overdraft, an unarranged overdraft is not expressly granted by the bank, and there is no previous agreement between the bank and the customer. Rather, the bank simply tolerates the overdraft.

Most banks set internal limits for unarranged overdrafts. However, customers are not automatically entitled to an unarranged overdraft.

As a rule, interest rates on unarranged overdrafts are even higher than those on arranged overdrafts.

Check the account balance and statements

You should keep an eye on your bank balance and ensure that it is sufficient to cover regular payments such as rent or electricity bills. It is also advisable to check your account statements at regular intervals.

Check your quarterly statements before the deadline for raising objections. After this deadline, you will no longer be able to object to the statements.

What fees are charged for a current account?

Current account fees may vary considerably depending on the bank. Some institutions, mostly direct banks which do not operate a branch network, do not charge account management fees. This is normally dependent on the account holder making regular monthly minimum payments into the account.

Alongside the account management fee, other fees may be charged, such as for a girocard, cash withdrawals at ATMs, or paper-based transfers.

Where can I open a current account?

Branch banks and direct banks offer a number of current accounts with different features, for example credit cards. Take the time to get detailed information and advice, from the branch directly, online or by telephone, before opening a current account.

All German credit institutions are required to inform their customers of the particular features of their products and the corresponding prices before concluding a contract. Information on how much a bank charges for current account services can be found in the bank’s schedule of prices and services. Before concluding a contract you should also read the general terms and conditions.

Are banks obliged to open a current account for me?

Banks are free to decide whether they want to accept an account application. However, if the bank rejects an application by a customer who does not yet have a current account and is thus unable to make cashless transactions, the customer is entitled to a basic payment account. Banks are obliged by law to offer a basic payment account under certain conditions. If the customer already has a basic payment account, no bank is obliged to open another account.

How can I switch or close my account?

As a customer, you can close your account at any time. While a notice period may be required, this notice period may not exceed one month.

If you switch your account, you need to make sure that your payment obligations are still met and that you continue to receive payments. During the account switching procedure, all customers are entitled to receive support by the banks involved if they wish. Beyond this legal obligation, many banks offer additional voluntary support services.

How are banks supervised?

BaFin has to grant domestic banks authorisation to offer current accounts. German banks are supervised by the Deutsche Bundesbank and BaFin and, if they exceed a certain size, also by the European Central Bank (ECB) within the scope of solvency supervision.

BaFin does not supervise current account fees and the corresponding services offered. As a supervisory authority, BaFin cannot make legally binding decisions on individual rights or claims stemming from a business relationship, or enforce these claims on behalf of individual customers.

Customers of foreign banks or of banks which are not subject to supervision in Germany may be faced with difficulties. For example, complaints might only be accepted in the local language, or there may be different legal bases and liability limits.

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