Germany is the largest economy in Europe, one of the Top 5 economies in the world and home to the banking metropolis Frankfurt. But even on a small scale, Germans are pretty good with their money.
If you want to follow the German news or spend a stretch of time living in the country, it’s important for you to know how banking, money, and insurances in Germany work. Here is your guide to important words covering banking and money in German.
Types of Bank Accounts
Everyday banking starts with opening a bank account (ein Konto eröffnen).
Girokonto
This is a current/checking account and used for all transactions that you need to keep your daily life moving. Employers will pay your salary into the Girokonto, and your regular Ausgaben (outgoings) such as Miete (rent), Strom (electricity) and Internet can be transferred from here by Dauerauftrag (standing order).
Girokontos allow their users to do important transactions like Geld überweisen (transfer money) and Rechnungen bezahlen (pay their bills).
Note that the German word zahlen (to pay) is very versatile when combined with prefixes, creating words such as:
- bezahlen (to pay for something)
- anzahlen (to put down a deposit)
- abzahlen (to pay something off, usually a loan or mortgage)
- zurückzahlen (to pay money back)
There are many more to be found. For an introduction to prefixes, this smarterGerman article is a great reference.
Sparkonto
Germans love saving money for a rainy day. In addition, they are more debt-averse than most other countries, so the amount of savings and investment possibilities on offer in German banks is significant.
The Sparkonto comes in many guises, from a Sparbuch for instant access and low interest to a Bausparkonto for putting money aside towards a long-term goal such as buying your own home. Big investments are not taken lightly in Germany. It’s not unheard of for people in their twenties to be in a savings habit that takes into account long-term, short-term and Altersvorsorge (pension investments).
No Cheques, no Credit Cards
In the German economy Bargeld (cash) is still the ruler of the tills. Consistent with wanting to know what they have and what they spend, Germans are Europe’s heaviest cash users. Credit cards and contactless payments are eyed up a little suspiciously, since you never know where your personal data may end up being used.
Got a big note? No problem! Denominations up to €50 are everyday occurrences and larger shops such as department stores are unlikely to bat an eyelid even if you turn up with a €500 note.
For larger purchases, the bank may help you to einen Kredit aufnehmen (take out a loan). They’ll check you’re credit history to see if you’re kreditwürdig and have some kind of Sicherheit (collateral) to secure the loan. It’s possible to buy things auf Raten (Hire Purchase), but that kind of deal is unpopular and may even be looked down upon as a sign of a buyer who is getting a little too big for his/her boots. The personal finance attitude is to idealise staying within your means and investing money for the future before making purchases that you cannot afford in the long run.
Nothing Like a Safety Net: insurances in Germany
By now you will have guessed that Germans are a safety-conscious bunch. Beyond savings, there is one more area of investment that Germans excel in: Versicherungen (insurance). Beyond the compulsory healthcare cover (health insurance which is mandatory even for international students in Germany) and Kfz-Versicherung (car insurance), here are a few other insurance policies you can take out in Germany:
Haftpflichtversicherung is considered a Must. It’s an all round personal cover to kick in when you cause financial damage to other people. No matter if you break your neighbour’s lawnmower or hit a pedestrian with your bicycle, they are within their rights to expect you to pay for the damage you caused.
Hausratversicherung (contents insurance) covers the items you have in your house such as Möbel (furniture) and computers.
Berufsunfähigkeitsversicherung is a long word and a helpful cover for those professionals who fear losing the ability to do their job for health reasons.
If all of those financial options and opportunities are a bit too much to handle at the start, the many Filialen (branches) of Germany’s banks and building societies are ready to provide advice in person. After all, they don’t consider Germany a savvy country for nothing.