Put Away Your Checkbook

Of all the things one can miss about a country after departure, the banking system probably shouldn’t be at the top of the list. For this ex-expat, however, it is actually one of the things I miss about Germany. The banking system there has arrived in the digital age, and North America is left in the dust.

For starters: put away the checkbook. Nobody in Germany has written a check in decades. When I arrived in 2000, checks were already obsolete. I was confused at the time: how do you pay individual people when you don’t have cash? The answer: bank transfers. In those dark ages of the internet, you paid others by filling out a paper Überweisung (transfer) slip, and giving it to your bank (possible via drop-box at most branches). This is still possible, and often for one-off bills you will receive the invoice with a pre-filled Überweisung in the mail. Unlike a check, the Überweisung is not handed to the recipient. Rather, the bank information for the recipient is filled out, along with your bank information, and this is processed at the debtor’s bank, then the money is transferred to the recipient.

Online banking has been an overwhelming success in Germany, and the paper Überweisung slip is now superfluous for anyone with an internet connection. The bank information can easily be filled out online, and submitted with a TAN (Transaktionsnummer, transaction number) which is a secret code to keep the transaction secure. Payment of bills and transferral of funds was never this easy! It is even possible to complete international money transfers via an Auslandsüberweisung (international transfer) if you have the relevant SWIFT code or IBAN. There is very little need for ever making it into a branch office, as almost all banking can be done online. That’s good news for the working population, as bank hours tend to be very limited.

As a comparison, here in Canada I have discovered that check- (or cheque-) writing is still very popular 13 years later. While many regular payments for utilities and rent can be deducted automatically from your account, and salary paid via direct deposit, there is no simple way to transfer money between different banks and accounts. Recently, banks have added the option of an email transfer, which seems dodgy at best (and costs about $1 per transaction). Any international transfer must be done at a branch office. Naturally, banks must stay open to meet the demands of the customers, and in Toronto they are open both Saturday and Sunday, with weeknight hours until 8pm. I have asked about their relatively archaic banking system, and was informed that it would be too expensive to upgrade the entire system, especially without any consumer demand.

North America doesn’t know what it’s missing in banking.

Despite the fantastic ease of online banking, there is one small caveat to keep in mind when opening your German bank account. Not all German banks issue cash cards that work internationally. My local state-owned bank in Baden-Württemberg, for instance, issued a cash card that only worked in Germany. Since I regularly wanted access to my funds outside of the country, this was a major issue and I eventually had to close the account. National banks and the Volksbank co-operative issue cash cards that work everywhere.

When you arrive in Germany, open your Girokonto (Giro from the Italian for circle, as the money circulates through the account), sign up for internet banking, and set up your payments. You can schedule your monthly rent payment to be transferred automatically; you can schedule quarterly payments in advance for the entire year. The utilities companies will send you forms to arrange for automatic withdrawal of your monthly payments. And your employer will collect your bank details for direct deposit of your salary. After that first day at the bank, you may never enter another branch until you close your account.

For more information on where and how to use your German debit card (EC card), read this post from the blog in 2009.

4 thoughts on “Put Away Your Checkbook

  1. As an overcorrect German, I have to stress zis point: “My local state-owned bank in Baden-Württemburg…”

    I know. English speakers and especially Northern Americans love to make a “Burg” out of “Berg” and a “Weiner” out of a “Wiener”. It’s just within your nature. You can’t help it. You are just cursed with the incorrect transliteration of a literal pronounciation. It’s even worse with initial K’s and Z’s.

    Volksbank is a credit union, Sparkassen are statutory corporations – at times even KdöR, Körperschaften des öffentlichen Rechts. They are not a “state run” organization, only a communally controlled one – checks and balances – but without serious factual political influence.

    Usually, you simply have a “Kundenkarte” for your bank. This includes EC (Eurocash) payment. With your pin or checked signature, you can use it to buy stuff at groceries free of additional charges. Those charges are being paid by the supermarkets. It’s about 3-5 cent, that’s why some supermarkets (Rewe) mostly ask for a minimum of 5€ on the receipt. It does have major advantages, though. Most entrepreneurs say it’s way more convenient, because it’s simply being booked off your account and onto theirs. And for supermarkets and gas stations… way fewer money in the register. Less incentive to being muged with one of these.

    I’m doing online banking since 1999. I got a free starter set from my bank with a card reader back then. It’s sufficiently safe and very convenient. Never understood why standing orders (Daueraufträge) for rent or energy bills or what-not never made their way across the big pond. I’ve been to the U.S. as a tourist and lived there for a while. And this cheque-thingie was really starting to piss me off. Very badly.

  2. Ha! Thanks for correcting my typo … of COURSE it matters whether it’s a Berg or a Burg!! 😉 I will admit to still being unable to distinguish between u and ü, however. I am always pronouncing Nudeln as Nüdeln and so on… (see my post on the trouble this got me into long ago: http://german-way.com/blog/2010/11/08/u-vs-ue/)

    Is the LBBW not state-owned? I thought it was. Naja, state-centered at the very least. The EC card is the European equivalent of the ATM/Cash card (debit card) in North America… so I wrote this in terms of that audience – same transaction principle, comes straight out of your account, etc.

    Thanks for your comments!

  3. LBBW is an Anstalt des öffentlichen Rechts (AdöR). Wikipedia says: “Ihre Träger sind (Stand: 16. Mai 2009) das Land Baden-Württemberg (35,611 %), der Sparkassenverband Baden-Württemberg (40,534 %), die Stadt Stuttgart (18,932 %) und die Landeskreditbank Baden-Württemberg – Förderbank – (4,923 %)” – so this means partially owned by Stadt und Land, but not “state-run” and with limited to no say in the operative business.

    • Bense, by your own list of the owners, Ruth was correct to say “state-owned”! As far as I can see, the Wikipedia ownership list does not include a single non-government entity. The LBBW is 100% government-owned — not partially. If the state and city governments are your bosses and owners, I’d also call that “state-run.” The management may claim to be independent, but they are beholden to the state and city governments, whether they admit it or not. In any case, private enterprise it’s NOT.

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