Study and research in Germany

From current or checking account to direct debit authorisation, we will explain all the important facts and terms about money transactions.

Banks (financial institutions): The German banking sector is very diverse. There are private corporate banks which include major banks as well as smaller, often regional private banks. There are public banks, including so-called savings banks (Sparkassen) or state banks (Landesbanken). Cooperative banks are another kind of financial institution (such as the Volksbanken and Raiffeisenbanken). Customers of these institutions each hold a small share of the bank. Many foreign financial institutions also maintain branches in Germany, mostly in the larger cities. Which bank you choose will depend completely on what services you expect from your bank – and what you are prepared to pay for these.

You can find a list of the most common banks with links and background information on the following websites:

• www.sellpage.de/fr_finanz.htm,
  
• www.bankenverband.de,
  
• http://de.wikipedia.org.

Current Account/Checking Account: Current accounts (Girokonto) are the most common form of account in Germany. Practically everybody who works has a current account on to which the (monthly) salary is paid. The also applies to most student jobs. Only very rarely are wages, fees or remunerations paid in cash or by cheque. So you will be well advised to open a current account no later than when you sign an employment contract.
At the same time, regular costs, like rent, electricity, plus other bills are also generally paid via the current account. You can agree with your bank that your account can be overdrawn up to a certain limit. If you then overdraw, you have to pay overdraft charges known as (Dispositionsgebühren – or in short – Dispogebühren). However, these are quite high. You will not generally get any interest, or if so only very little, for any credit on your account.
The account holder can use the current account to withdraw (Barabhebung) or pay in (Bareinzahlung) cash, to make bank transfers (Überweisung), set up standing orders (Dauerauftrag) or direct debits
Lastschriften or Einzugsermächtigung). You can carry out these transactions at the counter by filling in and signing an appropriate bank form, or by phone, or by online banking, or you can use the self-service terminal in the bank itself. The current account generally includes a debit card (also called cheque card), like the Maestro card (formally known as an EC-card). You can use the card to withdraw money from cash dispensers/ATMs or to make cashless payments in shops and stores.
The account holder usually has to pay for using the current account. These charges are generally settled once a quarter – or in the form of a lump-sum payment or itemised for each transaction. Some banks even offer free-of-charge current accounts.

Bank Transfers: If you have to pay a bill or fees (for example, to register at university), you will normally do this by bank transfer. The account holder hands in a payment form to the bank, which then transfers the specified sum to the specified account. Another, often cheaper, alternative is to use the self-service terminal (often located in the lobby to the bank) to make the bank transfer or just use online banking.
To be able to make a bank transfer, you have to enter the recipient's name, account number (Kontonummer), name of the bank, plus the bank or sort-code (Bankleitzahl).
For international transfers, you additionally need to enter the SWIFT-BIC (BIC = Bank Identifier Code) and IBAN (International Bank Account Number).

Standing Order: Standing orders are when you instruct your bank to send a specified sum at regular intervals to a specified recipient on a fixed date. The bank then does this as specified: monthly, quarterly or yearly. This is useful for monthly payments like rent or electricity, which always have to be paid on the 3rd of each month. For more information see: http://de.wikipedia.org.

Direct Debit Authorisation: If you issue a direct debit authorisation, you allow a recipient (for example, a phone company) to debit a certain amount from your account. Often, newspaper subscriptions or membership fees (e.g. tenant association or health club) are paid like this. If you use this kind of payment method, you must make sure that you regularly check your bank statements. Because, otherwise, sums could be booked from your account that you had never agreed to. The bank does not normally check these payments. For more information on this see: http://de.wikipedia.org.

Home or Online Banking: Home or online banking enables you to make most of your financial transactions by computer from the comfort of your own home. This includes bank transfers, checking your bank balance, or setting up standing orders.
But beware: Hackers all around the world have specialised in intercepting data and illegally re-routing money transfers. The law is not yet exactly clear on who is liable in such cases. If you're unlucky, your money may be lost. So, make sure that you agree with your bank in advance any security measures that you can use and also how the question of liability is governed.
The Federal Office for Information Security (Bundesamt für Sicherheit in der Informationstechnik) offers good tips on online banking on its website: www.bsi-fuer-buerger.de.

Student Loans: If you take out a loan, it is normally a bank that you borrow the money from. You have to pay interest on your loan amount, with the interest level and repayment formalities precisely defined in a loan agreement. Many financial institutions and banks meanwhile offer student loans to help students finance their studies. You can download an up-to-date comparison of such student loans from: www.che.de.

Before you open a bank account, please make sure that you inform yourself in detail about the terms and conditions. The following questions will help you do this:

• How high are the monthly bank charges?
  
• Does the bank offer special rates for students?
  
• Can "standing orders" and "direct debits" be issued – and what do they cost?
  
• How expensive are international bank transfers?
  
• Does the bank offer home or online banking?
  
• Do you immediately get an EC-card when you open the account?
  
• What cash dispensers/ATMs can you withdraw money from free of charge?
  
• Is withdrawing money abroad no problem?
  
• Do you get a credit card – and, if so, what are the terms and conditions?
  
• Are you allowed to overdraw the account? If yes, how high is the interest?
  
• After opening the account, can you immediately withdraw money from cash dispensers/ATMs?

You can also use the Internet to get a quick overview of the terms and conditions offered by the various banks. Studying these in detail is certainly worth it because costs differ substantially. Find out everything you need to know about banks and costs by checking out the following websites:

• www.forium.de/do/displayFirstPageKonten,
  
• www.banktip.de/rubrik2/13830/karten/Girokonto-Rechner.htm.