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 and business traveller. 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 šŸ˜‰Ā ).

DOs

1) Cash is king. Check https://cashchanger.co/singapore for the best rates (easily found in Change Alley, Raffles Place) for Euro notes. Should you exceed the 10,000 EUR threshold when entering Germany, do remember to report to the German customs (Zoll) upon arrival. Fill in form 0400 (Germany version) or form 0401 (English version) beforehand.Ā 

2) The mandatory blocked account (Sperrkonto) with restricted access aside, there is another free EURO account with IBAN (International Bank Account Number) you could conveniently open in Singapore: TransferWise not only provides a reliable competitive remittance service, but also offers Transferwise borderless card (Free debit Mastercard) and Transferwise Borderless account (Free Euro account).Ā  It may be faster and cheaper to make the initial transfer to your blocked account via TransferWise. Note that the Payment Services Act imposes limits on Singapore users of e-wallets (like TransferWise) on how much money they can send, spend or hold in their balance.Ā See link.Ā  Other comparable options include Revolut and Youtrip.

3) 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. Itā€™s easy to withdraw money free-of-charge from ATMs of partner banks like Postbank, HVB and Commerzbank. Furthermore, you could get foreign currency free of charge from ATMs of Deutsche Bank (Spain, Italy etc.) as well as their overseas partners (e.g Barclays in UK, Bank of America in the USA and Westpac in Australia). 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 charged around ā‚¬6 if you use the ATM of other banks.

Deutsche Bank provides contracts printed in English (available in their computer system).Ā Another way to get around the fees for ATM transactions is to set up a bank account with DKB, Consorsbank or Comdirect; these banks do not have a physical branch and offers only online banking services, but they offer cards with free withdrawals from ATMs around the world, regardless of which bank the ATM belongs to. The latest options are available on https://www.verivox.de/girokonto/.

In recent years, many newer ways of opening a blocked bank account in Germany have arisen. Here are some of the more popular blocked bank accounts used by our members in recent years:

Online platforms:
– Fintiba
– Coracle
– X-Patrio

Do note that using DeutscheĀ BankĀ would involve you making an extra trip down to the German Embassy in Singapore to verify your application documents at a fee. You will then have to send these documents to Germany via post and wait for them to approve of your request. Thus, we would personally suggest one of the other aforementionedĀ banksĀ instead.
Applying for the otherĀ bankĀ accounts can be done online, which reduces your waiting time. Some of theseĀ bankĀ accounts also allow you to apply for student insurance at the same time.

4) 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 ā‚¬1,55ā‚¬ each time (Porto).

5) 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 0.55% 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 Ā may use the PostIdent service offered by Deutsche Post either online or offline (at the Post Office).Ā 

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

6) 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.

7) 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 TransferWise Borderless Card which would allow you free ATM withdrawals of 350 SGD equivalent every 30 days with minimal exchange rate loss (no exchange rate loss if withdrawn from respective currency pocket.Last but not least, the cash option is always available. Best known money changer is Mustafa Complex, Chinatown, or Change Alley at Raffles Place.

8) Please bring a Singapore Debit/Credit card (Maestro/Mastercard/Visa). This is because certain ATM cards cannot be used in Europe due to an incompatible electronic chip. Should you wish to avoid queues at railway stations, you could pay for train tickets at those automated machines by card or on the respective App. 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 a Girocard (the German version of the ATM card).

DONā€™Ts

1) Never use bank drafts or travellerā€™s cheques. Horror stories of bank drafts taking forever and bank drafts getting lost are ubiquitous. Furthermore, cheques worth more than ā‚¬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 canā€™t withdraw the money. Worse still, your whole bank account would be ā€œfrozenā€ 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!) Incoming payments are free if made through SEPA payment in IBAN format i.e. see IBAN vs. SWIFT. TransferWise is one of the options.)

2) Donā€™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)

IBAN vs. SWIFT

All payments instructions to the EURO zone (including Germany) should be made in the IBAN format. Use of SWIFT format would lead to remittance delay and additional cost!

There are two internationally recognised, standardised methods of identifying bank accounts when a bank transfer is being made from one country to another: an International Bank Account Number (IBAN) and a Society for Worldwide Interbank Financial Telecommunication (SWIFT) code.

Germany is part of the Single Euro Payments Area (SEPA), which is a payment-integration initiative of the European Union for simplification of bank transfers denominated in euro. SEPA guarantees that Euro payments are received within a guaranteed time, and banks are not allowed to make any deductions of the amount transferred, introduced by a regulation in 2001. Therefore, Euro payments made via SEPA payments within the Euro zone are generally free.Ā 

IBAN is an internationally-agreed code made up of up to 34 letters and numbers that helps banks to process transfers around the world.

Each set of characters represents a different detail for your bank account. You can see the breakdown of this IBAN below.

https://www.worldfirst.com/uk/support/payments-transfers/iban-versus-swift-code/

IBAN Format Description Example

(DE89 3704 0044 0532 0130 00)

ISO Country Code Country code for Germany DE (Germany)
IBAN Check Digits Validate the routing destination 89
BBAN Country-specific details of the account number 3704 0044 0532 0130 00
Bank Identifier Known as Bankleitzahl (BLZ) with length of 8 digits unambiguously identifies the issuing institution 37040044
Account Number The account number or (Kontonummer in German) has a maximum length of 10 digits. It can be shorter than 10 digits, in this case zeros are added before the account number until it is 10 digits long. 0532013000
BIC/SWIFT COBADEFFXXX COBADEFFXXX

Behind most international money and security transfers is the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system. SWIFT is a vast messaging network used by banks and other financial institutions to quickly, accurately, and securely send and receive information, such as money transfer instructions.A SWIFT/BIC is an 8-11 character code that identifies the country, city, bank, and branch.Ā 

Format of a SWIFT/BIC code Description Example (COBADEFFXXX)
Bank code A-Z 4 letters representing the bank. It usually looks like a shortened version of that bank’s name.Ā  COBA
Country code A-Z 2 letters representing the country the bank is in.Ā  DE (for Germany)
Location code 0-9 A-Z 2 characters made up of letters or numbers. It says where that bank’s head office is.Ā  FF
Branch Code 0-9 A-Z 3 digits specifying a particular branch. ‘XXX’ represents the bankā€™s head office.Ā  XXX

Originally written by Augustine Zhang, updated and edited in September 2020.