There are different types of banks and savings banks (Sparkasse). Some banks have physical branches, where you talk to bank staff in person. Direct banks operate online. You usually have to pay a small fee to have a bank account. However, bank accounts are often free for school children and students.

The bank or savings bank may pay you interest on the money in your account. You only receive a small amount of interest on money in your current account (Girokonto). If you want to save money, it’s best to open a call deposit account (Tagesgeldkonto) or a savings account (Sparkonto). These offer slightly higher interest rates than a current account.

Would you like to open an account? Remember that there are different types of accounts. A normal bank account is called a current account (Girokonto). Sometimes, a bank might not allow you to open a current account, for example if you don’t have much money. The bank must then offer you a basic account (Basiskonto), which allows you to do the most important things: you can transfer money, pay by card, and deposit and withdraw money. This is usually a credit account, which means you can only spend as much money as you have.

If you have an account that offers you an overdraft (Dispo), you can withdraw money even if you have no more funds in your account. The bank will lend you money up to a specified amount. You have to repay not only this amount to the bank, but also interest. Interest rates are often very high.

You can go to a branch to open an account. The bank or savings bank will first check your identity, so remember to take your ID or passport with you.

Many banks allow you to open an account online or by post. To do this, you can use the postal identity procedure. The bank or savings bank will send you the necessary forms. Take these forms and your ID or passport to the post office. There, you can identify yourself. Sometimes you also need your certificate of registration (Meldebescheinigung) to open an account.

Most bank transactions can now be done online. This is called online banking. Today, few people visit branch in person. Many prefer to use an app on their smartphone. When you open an account, be sure to specify that you wish to do online banking or home banking.
This enables you to make bank transfers quickly and easily, for example when you are paying bills. All you need are the recipient’s account details and IBAN. For regular payments, like rent, it’s useful to set up a standing order.

SEPA payment transactions have been in place in most European countries since 2014. This is an easy way to make bank transfers in euro. To do this, you need an IBAN and BIC. These are series of numbers and letters. You can find the IBAN and BIC on your cash card, for example.

Do you like shopping online? If so, there are various ways to make payments. You can receive an invoice and then transfer the money. Or you can pay by debit or credit card. Other payment services include PayPal or Klarna. Many people in Germany have a PayPal account. This is an easy way of sending money to friends and acquaintances.

There are different kinds of cash cards: a girocard (Girokarte), a debit card or a credit card (for example MasterCard or Visa). The girocard was formerly known as the EC card and many people still use this name. Fees for cards vary from bank to bank. One of the cards is typically free of charge. The bank or savings bank usually sends you the card by post. You have to sign it. A few days later, a PIN number for your card will be sent to you by post. You must memorise your PIN number.

You can withdraw money from all cash machines with your girocard, debit card or credit card. To do this, you always need your PIN number. Some banks and cash machines charge fees, while others are free. Sometimes, you can also withdraw cash at supermarket checkouts.

You can use your girocard to pay in shops and restaurants. You can usually also use a debit card or credit card. But remember, paying by card is not possible everywhere in Germany. Some restaurants, cafés or small stores only accept cash.

If your cash card has been lost or stolen, block the card as quickly as possible. Call the emergency number: 116116.

Your employer pays you a salary. A gross annual salary is usually agreed. However, this is not the money that goes into your account. Your contribution towards statutory social insurance is deducted from this amount. The state also withholds income tax from your salary. Your net salary is the money that is left over. Your employer transfers this amount to your account each month. Make sure that you have enough money to live on. You will need money for accommodation, food, leisure activities and many other things. Find out more in the sections “Insurance” and “Starting work”.

In Germany, there is a legal obligation to pay taxes. This means that everyone who works pays taxes on their income. This is income tax. You will receive a tax number from the tax office and a tax identification number from the Federal Central Tax Office. This is an 11-digit number. You will also have an electronic income tax card (ELStAM). Your employer automatically receives this card from the tax office.

If you’re an employee, your employer will transfer your income tax to the tax office. You don't have to do anything. Do you have your own business? Self-employed people also have to pay income tax. This is a little more complicated. Self-employed people make an advance payment to the tax office. You have to submit a tax return for each year. You may then have to pay more money or you might get money back.

The income tax you have to pay depends on your salary. The more you earn, the more tax you pay. The less you earn, the less you pay. Your tax bracket is also important. If you’re married or have children, for example, you pay less tax.

If you’re a member of the church, you are also required to pay church tax. Businesses are subject to trade tax, which is paid to the city or municipality.

Employees can also file an income tax return every year. You report your earnings but also your expenses to the tax office. After submitting the tax return, employees often receive a refund from the tax office. You can complete the tax return on your own, for example using the ELSTER platform provided by the tax office. Or you can consult a tax adviser. However, this service involves a fee.

There are many different types of insurance in Germany. Some are compulsory, others are voluntary. One important type of insurance is pension insurance. The statutory pension scheme ensures that you have enough money in old age. However, this is often not enough. It’s usually a good idea to have a private pension insurance. Read more about this in our section “Insurance”.

Be sure to keep all important financial documents in a safe place. This also applies to documents relating to your identity, for example your social security card or passport, but also personal certificates such as your birth or marriage certificate. School and work certificates should also be kept in a safe place.