Choosing the right Bank

Here are some tips put together from my experiences with the banking system in Germany and knowledge as an Economics student. Do also check with your other seniors who may have more up-to-date information and advice. If necessary, you may also contact me (your personal financial consultant ;) ).

DOs

1) Deutsche Bank is popular among Singapore students. Get an account holder to recommend you and he/she will get a free gift like coffee machine or trolley 6 weeks later. Thereafter, just share it among yourselves. It’s easy to withdraw money free-of-charge from ATMs of partner banks like Norisbank, Postbank, HVB, Commerzbank and Dresdner Bank. Furthermore, you could get foreign currency free of charge from ATMs of Deutsche Bank (Spain, Italy, Poland and Czech Republic etc.) as well as their overseas partners (e.g Barclays in UK, Bank of America in the USA). So, this could come in handy if you are travelling a lot and wish to reduce risks associated with holding cash. Do note that you can only use ATMs from the Cash Group only; otherwise, you will be charge around €5 if you use the ATM of other banks. Just ask for the StudentenVorteilsKonto or Das Junge Konto; Deutsche Bank provides contracts printed in English (available in their computer system) and you could ask your personal banker / consultant (Berater) to help you out. Another way to get around the fees for ATM transactions is to set up a bank account with DKB or Comdirect; these banks do not have a physical branch and offers only online bankin services, but they offer cards with free withdrawals from ATMs around the world, regardless of which bank the ATM belongs to.

2) Print out your bank statements (Kontoauszug) regularly (every 4 weeks) or switch to online bank statements. Otherwise, your bank will mail your bank statement to you and charge you around €1,55€ each time (Porto).

3) If your allowance comes in lump sums, it is advisable to open a money market account (Tagesgeldkonto). This is a way to earn interest income while holding on to surplus cash. Numerous websites provide you with advice on the banks that offer the best conditions for your needs. Interest rates hover around 3% p.a and interest income is credited on a monthly, quarterly or annual basis. Such accounts are usually only accessible using online banking. Should you require a sense of security, CC-bank (www.cc-bank.de) allows you withdraw money over the bank counter during the branch opening hours. Otherwise, 1822direkt (https://www.1822direkt.com) offers 3.8% now, but to withdraw, you can only transfer online to your principal account. (e.g. your Deutsche Bank/ Sparkasse current/savings account) To open a money market account, you usually enter your particulars online, print out the form and submit it with a copy of your passport and residence permit at the Post office. The Deutsche Post counter staff would usually verify your identity on behalf the bank staff (PostIdent) and mail the documents to the bank. Your account would then be opened and the online banking particulars will be mailed to you. Any transfer in and out of the account would be conducted via online banking.

To compare the different interest rates of the different banks for the Tagesgeldkonto, please click here!

4) Fixed deposits (Festgeld) are also available, but they rob you of your liquidity. Unless you foresee Euro interest rates to fall over the next few months, it is more advisable to keep your money in a money market account to profit from rising interest rates rather than locking your money in.

5) Some Singapore banks also offer up to 2 free overseas withdrawals per month. Note that the Singapore dollar is not a major currency. Euros withdrawn would be converted to US dollar and then to Singapore dollar, resulting in a 1% exchange loss for each transaction. This amounts to a total of 2% exchange loss. Another option would be Citibank (www.citi.com). With Citicard, you could withdraw money from any Citibank ATM worldwide free-of-charge (in Germany this is currently offered through the ATM of Targo Bank), incurring just a 1% conversion loss if the withdrawal is made in foreign currency. A convenient arrangement would be to have a Citibank account both in Singapore and in Germany. Incoming telegraphic fees would be waived for transfers between Citibank branches worldwide. Last but not least, the cash option is always available. Best known money changer is Mustafa Complex, Chinatown, or Change Alley at Raffles Place.

6) Please bring a Singapore Debit/Credit card (Maestro/Mastercard/Visa). This is because certain ATM cards, such as the POSB GO! card, cannot be used in Europe due to an incompatible electronic chip. Should you wish to avoid queues at railway stations, you could pay train tickets at those automated machines by card. True enough, in certain major stations, automated machines have started accepting cash too. Nevertheless, card payment is still much more convenient. Payment can usually also be done with an EC-card (electronic cash, the German version of the ATM card).

DON’Ts

1) Never use bank drafts or traveller’s cheques. Horror stories of bank drafts taking forever and bank drafts getting lost are ubiquitous. Furthermore, cheques worth more than €1000 cannot be deposited into an bank account if the owner has been with the bank for less than 6 months. It will take 6-8 weeks for the banks to clear it. Even if it is credited into your account, you can’t withdraw the money. Worse still, your whole bank account would be “frozen” while they await the end of the settlement period. Even if the original amount suffices (before depositing the bank draft), you cannot transfer out any money. The best option would be to either deposit the money in cash, or do a bank transfer (note the bank transfer fees!)

2) Don’t even dream of bringing Singapore dollars here to change! German banks commit daylight robbery by charging exorbitant rates. It is better to open a bank account in Germany first and ask your relatives send you a telegraphic transfer. Otherwise, use a Singapore ATM Card (POSB, DBS etc.) to get money here or simply bring your Euros along.

3) Please do not get lured into signing up for credit cards/ plans you do not need and do not believe everything the banker tells you. Check for hidden charges lest you get surprised. Read your contract carefully and ask for the price catalogue. (Preisleistungsverzeichnis/Preisaushang)

Originally written by Augustine Zhang, updated and edited in April 2012.