German banking (and credit cards) for beginners

EC card
A German EC/Maestro bank card.
Another EC card (photo)

When I was traveling in France recently, I rediscovered some of the differences among the European countries in the area of banking and credit card use. Credit cards are more common in France than in Germany (but not as common as in the US), and the French still write personal checks, just like in the US, but very unlike in Germany.

Expats in Germany already know that Germans just don’t use checks. A check drawn on a US bank account is virtually useless in Germany. It takes a lot of effort, a German bank account, and some financial savy to cash or even just deposit a US check at a German bank. The German equivalent of a personal check is called eine Geldüberweisung (“money transfer”), but these days you rarely see the paper variety. Usually, you handle an Überweisung by computer, transferring funds from your German bank account to someone else’s account.

Then there’s the matter of credit cards. While the US could be termed a cashless (plastic) economy, Germany is definitely a cash economy. Credit cards are not popular in Germany at all. As long as you stick to the tourist circuit (hotels, car rental, travel services, restaurants, etc.), credit cards will usually be accepted (but there are exceptions even here). However, if you are living in Germany “on the economy,” as they say, you’ll quickly discover that Visa, MasterCard, and American Express are not commonly accepted in many places where they would be in the US. Your daily shopping will require cash or an EC card (a type of German/European debit card).

Even most local restaurants off the tourist circuit in Germany don’t accept card payments, something almost unheard of in the States. The neighborhood grocer and even larger supermarkets generally say “nein” to credit cards. While department stores, larger stores, and shopping malls usually accept plastic payment, many will only take an EC/Maestro card. German bookstores are notorious for not accepting credit cards, but most allow EC card payment.

Let’s take a minute to discuss the all important EC/Maestro card. To get one in Germany, you need a German bank account. The EC (“electronic cash”) or Maestro card is a lot like a US bank card, but in addition to a magnetic strip, it has an imbedded microchip. (See photo above.) Although the Maestro card is a MasterCard product (and has a logo that resembles the MC one), it is not a MasterCard or a credit card. It’s strictly a debit card that will electronically transfer money from your German (or other EU) bank account to a merchant’s account. It’s one of the first things any expat needs to get after arriving in Germany. (It comes with most German bank accounts.) To use the Maestro card, you need a four-digit PIN (Geheimzahl). Next to cash, the EC/Maestro card is the most common way to pay for shopping purchases in Austria, Germany, and Switzerland.

Despite the prevalence of the EC card, Europe and the EU have yet to reach the goal of a universal debit card that can be used easily all across Europe. (Required by 2010, but we’ll see.) Although the Maestro card is also found in the UK, for example, a German Maestro card can’t be used there. I’ve even had problems using a German one in France, although that is not supposed to be a problem. Bottom line: Have cash and a credit card on hand, just in case. You shouldn’t have any problem using an EC/Maestro card in the German-speaking countries and most of continental Europe, but the reality is that problems can still arise. It is also possible to get a prepaid Maestro card in the United States, but I’m not familiar with the US card and don’t know if it works in Europe or not (but there are ATM and POS fees if it does).

Most expats want to keep using their US or other bank accounts while in Germany. Thanks to online banking, you can still manage your US bank account from Germany, but that won’t help you transfer funds from your US to your German account, or vice versa. There are several ways to do that, all of which will cost you. (PayPal is popular in Germany, but there are other options.) However, that’s a topic for another day. For now, see our Transferring funds page for an introduction.

Also see these money-related GW pages: