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Why bank customers in Germany are facing higher fees

Banking in Germany is known for being costly for customers. But a consumer rights group has found evidence of fee increases across the board. Here's what's happening - and why.

Why bank customers in Germany are facing higher fees
Which German bank is the most cost-effective for you? Photo: picture alliance/dpa/dpa-tmn | Zacharie Scheurer

Is free banking becoming something of the distant past? It appears so. Consumer research organisation Stiftung Warentest has found that German banks are cranking up fees to compensate for low interest rates.

Amid legal action to prevent banks from exploiting their customers, the consumer group found evidence of consistent fee increases across the board, and a dwindling number of cost-effective services.

Anyone who lives in Germany will be aware that many accounts and services with German banks have long been pricey, with charges linked to cash withdrawal from ATMs outside of your banking pool, use of credit cards, and current accounts.

READ ALSO: What to know about starting your personal banking in Germany

Germany still has a high cash-based economy, as the majority of payments are still done with physical money, meaning that aspects of the industry have taken longer to modernise. 

Your banking pool – the set of banks from which you can withdraw cash for free – depends on the partner agreements that your bank has with others. The three major German banks – Deutsche Bank, Commerzbank and HypoVereinsbank – all allow free withdrawals from their ATMs for customers of any of the three, but this is a fairly recent change.

Photo: picture alliance/dpa/dpa-tmn | Benjamin Nolte

And as charges decline for this service, fees are being levied in other areas to ensure rising profits in an often unstable sector, consumer groups have found.

Looking into giro accounts (similar to checking accounts or current accounts) offered by German banks, Stiftung Warentest found that taking out an account for free and without unnecessary conditions attached is significantly more difficult than it was in previous years. 

Heike Nicodemus, a finance expert for the DPA, commented on this trend, saying that “it is striking that fees are being raised or introduced, and free accounts are having conditions imposed on them for the first time – for instance, a required monthly receipt of money”.

READ ALSO: Why a German court decision means you could be entitled to compensation from your bank

Only 14 free accounts with no conditions

In a study of 380 models from 152 banks and savings banks, researchers located just 14 accounts which were both free and had no conditions attached, down from 20 accounts one year ago. According to the data, 10 of these cost-free models are at branched credit institutions, whilst the others are at direct or online banks. 

By ‘free’ accounts, Stiftung Warentest means accounts with no base fee, no charges for bank statements, bookings, Girocards or withdrawing from ATMs in your own pool of banks, and no conditions requiring regular receipt of any specific sum of money. 

Experts from the consumer organisation stated that, in their view, any account which costs less than €60 is probably cost-effective, given that this pays for banks to process bookings, provide Girocards and physical ATMs and secure technology for online banking. A total of 90 accounts on offer across the country offered accounts for this price level or under, but the number is shrinking every year. 

There have been recent disputes about the unethical pricing methods of major German credit institutions. Fee information is often concealed from customers on their websites, and price increases are being hidden in less noticeable areas as ‘surcharges’, as evidenced by price hikes in paper bank transfers and credit cards in recent years. 

Court action over fee hikes

These disputes have escalated into legal and legislative action. Recently, the Federal Court of Justice set strict limits on fee increases, meaning that banks now have to receive consent from their customers before changing their terms and conditions. A court ruled in April that the clause stating that financial institutions may assume tacit consent from customers if they have not objected to fee changes within two months “disadvantages customers significantly”.

Financial institutions have been upping fees for years now. Low interest rates across Europe are putting them under pressure to make up for shortfalls; on top of this, financial institutions have to pay 0.5 percent negative interest when parking money in the European Central Bank. Although there are exemptions for higher sums, the sector is still complaining of expenses along the lines of billions of Euros. 

To add to this, as society becomes more digitalised, ever more bank branches are closing down. According to statistics by the German Central Bank, the number of physical branches this year dropped by 9.6 percent from the previous, taking the overall sum to 24,100. A massive 2,567 branches were closed within that period. 

Germany’s banking system is based on three different pillars, including private commercial banks, public savings banks and co-operative banks. Private commercial banks represent the largest segment when it comes to assets, totalling around 40 percent of the overall sum.

The good news is that getting a German bank account is a relatively streamlined service for residents (including foreigners), even if you do risk being affected by these increasing fees. If you have a residence in Germany, Austria or Switzerland you can open an account at almost all of Germany’s major banks. 

However, the bank account rejection rate for non-residents is high, meaning that you might be better off opening a bank account in a different European country, as Germany’s membership of the Single European Payments Area (SEPA) means that euro transfers across countries are just as cheap and quick as within a single country. 

READ ALSO: Germany’s Commerzbank to cut 10,000 jobs and close 340 branches

Translation by Antonia Harrison

Member comments

  1. Hmm, the co-operative banks sounds similar to the credit unions here in the States; both serve and help their communities, offer lower rates and fees for loans, little to no fees on ATM withdrawals or account maintenance (to name a few), all members have a say/vote on the co-op’s/union’s operations, and of course putting people over profits, unlike big banks where most people are considered as an afterthought. Being a long-time member of a union myself, I gladly tell anyone to join a credit union if and when possible.

    If you think the fees at banks are bad though, some pre-paid debit cards here actually charge you for calling their customer service; it’s a small fee like 25 or 50 cents per call which is not only insane, but should be illegal and discourages people from calling should they have an problem, while others charge monthly maintenance fees, or minimum amount that you have to deposit otherwise it’ll deny any lower amount; one such card I used long ago required a minimum $23 (17 euros) deposit, on top of a $3 (2 euro) fee, and then another $3 for a monthly maintenance fee too, so yeah these cards are very predatory, and make many pay a pretty penny for the privilege of a debit card.

    So yeah, if I had to rank the three the credit unions/co ops would be leading the pack, banks 2nd, and pre-paid cards would be dead last, as those cost way more than their actual worth. Just my two cents/experience.

  2. Meant to say $23 (17 euros) in last comment…hope the Local adds an edit button for comments in the future.

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REVEALED: The most commonly asked questions about Germans and Germany

Ever wondered what the world is asking about Germany and the Germans? We looked at Google’s most searched results to find out – and help clear some of these queries up.

Hasan Salihamidzic, the sports director of FC Bayern, arrives with his wife at Oktoberfest in full traditional dress. Photo: picture alliance/dpa |

According to popular searches, Germany is the go-to place for good coffee and bread (although only if you like the hard kind) and the place to avoid if what you’re looking for is good food, good internet connection and low taxes. Of course, this is subjective; some people will travel long stretches to get a fresh, hot pretzel or a juicy Bratwurst, while others will take a hard pass.

When it comes to the question on the bad Internet – there is some truth to this. German is known for being behind other rich nations when it comes to connectivity. And from personal experience, the internet connection can seem a little medieval. The incoming German coalition government has, however, vowed to improve internet connectivity as part of their plans to modernise the country.

There are also frequent questions on learning the German language, and people pointing out that it is hard and complicated. This is probably due to the long compound words and its extensive grammar rules, however, as both English and German are Germanic languages with similar words in common, it’s not impossible to learn as an English-speaker.

Here’s a look at some of those questions…

Why is German called Deutsch? Whereas ‘German’ comes from the Latin, ‘Deutsch’ instead derives itself from the Indo-European root “þeudō”, meaning “people”. This slowly became “Deutsch” as we know it today. It can be a bit confusing to English-speakers, who are right to think it sounds a little more like “Dutch”, however the two languages do have the same roots which may explain it.

And why is Germany so boring? Again, probably a generalisation, especially given that Germany has a landmass of over 350,000 km² with areas ranging from high rise, industrial cities to traditional old town villages and even mountain ranges, so you’re sure to find a place that doesn’t bore you to tears.

Perhaps it is a question that comes from the stereotype that Germans are obsessed with strict about rules, organised and analytical. Or that they have no sense of humour – all of these things being not the most exciting traits. 

Either way, from my experience I can confirm that, even though there is truth to German society enjoying order and rules, the vast majority of people are not boring, and I’m sure if you come to Germany you’ll meet many interesting, funny and exciting people. 

READ ALSO: 12 mistakes foreigners make when moving to Germany

When it comes to the German weather, most people assume a cold and cloudy climate, however this isn’t entirely true. While the autumn and winter, especially in the north, comes with grey skies and sub-zero temperatures, Germany can have some beautiful summers, with temperatures frequently rising above 30C in some places.

Unsurprisingly, the power and wealth of the German nation is mentioned – Germany is the largest economy in Europe after all, with a GDP of 3.8 trillion dollars. This could be due to strong industry sectors in the country, including vehicle constructions (I was a little surprised to find no questions posed on German cars), chemical and electrical industry and engineering. There are also many strong economic cities in Germany, most notably Munich, Frankfurt am Main and Hamburg.

READ ALSO: Eight unique words and phrases that tell us something about Germany

Smart and tall?

Why are Germans so tall? They are indeed taller than many other nations, with the average German measuring a good 172.87cm (or 5 feet 8.06 inches), however this may be a question better posed to the Dutch, who make up the tallest people in the world.

Why are Germans so smart? While this is again a generalisation – as individuals have different levels of intelligence in all countries – this question may stem from Germany’s free higher education system or their seemingly efficient work ethic. Plus there does seem to be some scientific research behind this question, with a study done in 2006 finding that Germans had the highest IQ in Europe.

So, while many of the questions posed about Germany and Germans on Google stem from stereotypes, we can confirm that some aren’t entirely made up. If you’re looking to debunk some frequently asked questions about France and the French, check out this article by our sister site HERE.