The devil is in the detail when it comes to free banking services in Germany, with caveats and conditions clawing back money from customers who sign up for supposedly ‘fee-free' accounts.
A report published last month by German consumer advocacy group Stiftung Warentest surveyed accounts offered by 73 banks in Germany and found that while 51 banks offer accounts which can be free of charge, just eight banks offer free banking services without any strings attached.
Hermann Tenhagen, editor-in-chief at Stiftung Warentest, said: “You can get a free bank account in Germany but there are still too many caveats for many offers.”
The report concluded that the reality behind many advertisements proclaiming ‘€-zero' banking was often a plethora of stealth charges and transaction fees. Less than a fifth of the banks surveyed were able to meet the ‘free-means-free test,' which required that a account does not extract a monthly account maintenance fee, charge for using a credit or debit card at an ATM cash dispenser or impose ancillary terms and conditions which can result in extra costs for customers.
One of the most common caveats on free banking accounts was the requirement of a monthly salary – which ranged from €3,000 a month at Postbank to €600 a month at Targobank – to be paid into the account, or regular payments having to be made into a savings account.
Other ‘free' accounts imposed a limit on the number of transactions a customer could make each month, before imposing additional charges. Customers with a tarnished credit history after failing to repay loans or credit cards in the past were also denied free banking facilities by banks such as Deutsche Kreditbank (DKB).
Eike Böttcher, a spokesman for Banktip.de, a price comparison website, said: “No-fee offers mostly relate to a certain amount that has to be paid into an account each month. These terms need to be checked before signing up for a bank account. Fees for using ATMs should also be considered as free transactions may apply only to a particular card. Customers can also expect heavy charges if they exceed an agreed overdraft or borrowing limit.”
Deutsche Bank subsidiary norisbank came out top in the test for offering truly free banking services to its customers, providing fee-free services online and in its branch network. PSD-Bank Berlin-Brandenburg and Hessen-Thüringen also offered genuinely free banking services.
Bank customers who choose to go online to manage their accounts also enjoyed some of the best deals in the market with Comdirect, ING-DiBa and Wüstenrot all offering highly competitive free online banking services. However, a spokeswoman for Stiftung Warentest said that only customers who feel at ease when using the internet should choose to manage their bank account online.
Christiane Krämer, a spokeswoman for Comdirect in Quickborn, said: “A customer should decide if he or she prefers a bank with affiliates or would instead prefer to be a client of a direct bank such as Comdirect, which offers longer service times and is reachable from all over the world.”
Thomas Gröbel, a branch manager at Hypovereinsbank in Berlin, said that while accounts offered by internet banks were competitive, the benefits of banking online in Germany were still outweighed by traditional bricks and mortar-based offerings.
“A customer of a branch-based bank can speak to someone face-to-face when there is a problem, rather than just another anonymous person in a call centre. A branch can also still offer services that you can't obtain online,” Gröbel said. “In Germany, a lot of people still like to use cash. If, for example, you are with a branch and you need to withdraw more than €1,000 at a cash dispenser you can just go into your branch and pick up the money.”
Böttcher said price comparison websites could be invaluable tools for a German-speaking customer seeking to find the right bank account to meet their needs, providing ‘how-to' articles on how a bank customer should manage their finances.
But non-German speakers may also want to consider setting up an account with a bank which offers an English language service. Commerzbank and Dresdner bank offer English language services, along with Deutsche Bank, which despite not being among the most competitive banks in its imposition of banking fees, offers excellent English-language customer service.
“Check whether you need a bank with branches or not. Ask yourself if you can go without consultation. Check and ask the guys at the bank itself if free-offers are really free of charge,” said Böttcher.
Bank customers should not pay fees of more than €40 a year for an online account and €80 a year for a branch-based account, the Stiftung Warentest report concluded.