All You Need To Know About Savings Accounts in Germany

Saving money is crucial throughout our entire life. Savings build up financial security, and you even earn interest on your money. Nowadays, banks offer different options for people willing to keep money in their accounts. In Germany, they are divided into two main categories – instant access savings accounts and fixed deposit accounts. 

There are two main types of savings accounts in Germany: instant access savings account (Tagesgeldkonto) and fixed deposit account (Festgeldkonto). Both of them are available at the majority of German banks and are free of charge. The interest rate for Festgeldkonto is about 2,00%, while for Tagesgeldkonto is only 0,5% on average.

Savings accounts are widespread in Germany, and almost all major banks offer them to clients. Interest rates are pretty stable, so you can be sure you get a boost of about 2% on your savings every year. In this article, we explain what German savings accounts are in a nutshell as well as present some of the best options out there.

Savings accounts in Germany: 101

Savings accounts in Germany are divided into three main types, two of which give a customer an annual interest rate, including:

  • Instant access savings account (Tagesgeldkonto)
  • Fixed deposit account (Festgeldkonto)
  • Savings account (Sparbuch)

The latter is classical savings account with a very low interest rate. We won’t discuss it in this article since it’s pretty self-explanatory.

An instant access savings account gives you flexible access to saved money at any time while taking out money from fixed deposit accounts is impossible or can cause the loss of the earned interest.

An instant access savings account is usually connected to your checking account. You can’t spend money with a savings account, as usual, to pay bills, for example. Hence, it cannot be managed like a current account; for example, no transfers or standing orders are possible.

Moving money in and out of a savings account can be done via electronic funds transfers, with some banks also offering mobile check deposits or ATM access.

To withdraw money from a savings account, you must transfer funds to the current account. Besides, you can’t withdraw cash from an instant access savings account.

Types of savings accounts in Germany

1. Instant access savings account or Tagesgeldkonto

An instant access savings account (Tagesgeldkonto) is the most flexible and common type of savings account in Germany. You can withdraw the money as needed and aren’t bound to a fixed term.

It’s similar to a checking account but pays you an interest rate. The interest rate isn’t fixed and can fluctuate at any time. Depending on the conditions, you can receive an interest rate monthly, quarterly, or annually. The variable interest rate differentiates this type of account from a more stable fixed deposit account.

That said, the instant access savings account is a good option if you want an addition to your checking account to deposit money on a short-term basis and set aside an emergency fund. The interest rates on these types of accounts are low.

The opening and use of instant access savings accounts are usually free.

Pros and cons of the instant access savings account

The main benefits of the flexible savings account are:

  • High flexibility – you can withdraw money daily.
  • Interest rates are higher than with a classical savings (Sparbuch) or current account.
  • You can increase your deposit at any time and free of charge.
  • There is no notice period – you can cancel an account daily.
  • The safety is high due to the legal deposit guarantee of up to 100,000 EUR.

However, there are some considerable disadvantages to these types of accounts:

  • The interest rate can fluctuate daily, so it can be lower or higher.
  • The interest rates are generally lower than with a fixed deposit account.

2. Fixed deposit account or Festgeldkonto

Fixed deposit accounts give the best interest rates in Germany, yet, they require a minimum initial investment, usually between 1,000 and 5,000 EUR.

Fixed-term deposit accounts are your best option if you want to invest your money securely over an extended period of time and don’t want to take any risk. They provide significantly higher interest rates (2,5% on average) than instant access accounts.

The lack of flexibility is the main disadvantage of this type of account. You aren’t able to access your money before the agreed term expires. The deposit period range between 1 month and 10 years.

Pros and cons of the fixed deposit account

The benefits of a fixed deposit account are:

  • The main benefit of a fixed deposit account is relatively high interest rates for a guaranteed period.
  • The interest rates are higher than with instant access savings accounts.
  • The interest rate is guaranteed for the entire period.
  • The longer you invest the money, the higher the interest.
  • High security due to the statutory deposit guarantee of up to 100,000 EUR.

However, you must keep these disadvantages in mind:

  • You can’t use or withdraw funds for the term of the time deposit.
  • The interest rate is fixed for the entire term. Possible interest rate increases in the market aren’t taken into account.
  • A minimum deposit of between 1,000 and 5,000 EUR is required.

Instant access savings account vs fixed deposit account

As you can hear from the name, one account type gives you access to funds at any time while another isn’t. Money deposited with fixed accounts is unavailable for customers for the period of the term.

So, which savings account should you pick in Germany to park your money? The instant access savings account is useful if you want to save money for an emergency or start a savings plan.

With a fixed deposit account, you invest funds that you don’t need for the time being. It’s the best option for a long-term savings plan.

You must have emergency savings in place to secure your financial future. In both cases, make sure that the bank has deposit insurance so that your money is safe even in the event of a crisis.

When to choose an instant access savings account?

The main conclusion is that with an instant access savings account, you invest money over an indefinite period of time at a variable interest rate. You are also flexible about how and how much to deposit, so you can transfer a large sum of money once or deposit different amounts on a regular basis.

If you are choosing between a typical current bank account, a savings account (Sparbuch), and instant access savings account to deposit your money, the latter is a better choice.

Both accounts give you security. The insurance provides you protection for up to 100,000 EUR. If the bank becomes bankrupt, you will get your money back.

At the same time, fixed deposit accounts aren’t suitable for emergencies. If you want to have a security fund, you should also choose an instant access savings account.

When to pick a fixed deposit account?

On the other hand, you should choose a fixed deposit account if you want to save your money for a longer period of time and at a fixed interest rate. Besides, it’s the best option if you want to achieve the greatest profits from your money.

Also, if you currently have a larger sum of money that you don’t want to invest in other asset classes, such as shares or ETFs, you can deposit it with the fixed deposit account without risk. Yet, it’s better not to choose a long holding period. In the end, you don’t know how much interest rates will be in the future.

Interest rates

Interest rates are higher with fixed deposit accounts. With an instant access savings account, you can expect about 0,5%.

Since you deposit your money for a longer and fixed period of time, banks also give higher interest rates with fixed deposit accounts. A rate of 2,5% is quite common. Furthermore, the longer the period you deposit money for, the higher the interest.

So, if you choose a fixed deposit account, you should consider a longer investment period.

Flexibility

Instant access savings accounts are more flexible. You can open and close them at any time. Besides, account holders can transfer money to their current account and withdraw cash this way.

Fixed deposit accounts require you to keep your money for an agreed term; thus, early termination isn’t possible.

Minimal deposit

A minimal deposit is lower or isn’t required with an instant access savings account. On the other hand, to open a fixed deposit account, you need to make a significant minimum deposit which depends on the provider.

Interest rates on German savings accounts

So what interest rate could you expect on your invested money?

Interest rates on fixed deposit accounts

With fixed deposit accounts, the interest rate is highly dependent on the deposit period; so for one-year time deposits, the maximum interest rate is currently 1.70%, and for three-year time deposits 2.50% per year.

The highest rate of 2,5% is given on deposits from 36 to 120 months. If you hold money only for 6 months, you will get a rate of 1,25%.

Here are current interest rates for fixed deposit accounts:

PeriodDeposit (EUR)Interest rateInterest (EUR)
1 year10.000 2,00%200
2 year10.0002,30%460
3 years10.0002,50%750
4 years10.0002,50%1.000
5 years10.0002,60%1.300
10 years10.0002,45%2.450

Interest rates on instant access savings accounts

The average interest rate for an instant access savings account is 0.50% and can be up to 0.75%.

Best savings accounts in Germany

Best instant access savings accounts

Below you can find a comparison of the best German instant access savings accounts:

1. Renault Bank Direct

  • Minimum initial deposit: no
  • Minimum ongoing balance: no
  • Monthly fee: no
  • Online banking: yes
  • Interest payment: monthly
  • Checking accounts available: no
  • Attractive interest rate: up to 0,55% guaranteed for 3 months
  • The money is available for use daily
  • 100% deposit protection for up to 100,000 EUR

Interest rates

  1. Guarantee of 0,55% interest rate for up to 250,000 EUR for 3 months after account opening.
  2. Guarantee of 0,20% interest rate for funds over 250,000 EUR, for 3 months after account opening.

2. Consorsbank

  • 20 EUR bonus when opening an account
  • Minimum initial deposit: no
  • Minimum ongoing balance: no
  • Monthly fee: no
  • Online banking: yes
  • ATM card: yes
  • Checking accounts available: yes, free
  • Interest payment: monthly
  • Some of the highest interest rates in Germany – up to 0,60% guaranteed for 6 months
  • The money is available for use daily
  • 100% deposit protection for up to 100,000 EUR

Interest rates

  1. Guarantee of 0,60% interest rate for up to 250,000 EUR for 6 months after account opening with possible extension to another 6 months.

Compare rates and choose the best instant access savings account in the form below:

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Best fixed deposit accounts

1. Consorsbank

  • Minimum initial deposit: yes, 10,000 EUR
  • Maximal deposit: 1.000.000 EUR
  • Minimum ongoing balance: no
  • Monthly fee: no
  • Online banking: yes
  • Checking accounts available: yes, free
  • Interest payment: annually
  • Term duration: 12 or 24 months
  • 100% deposit protection for up to 100,000 EUR

Interest rates

  1. Guaranteed interest rate of 0,08% for 12 months and 1.20% for 24 months.

2. Renault Bank Direct

  • Minimum initial deposit: yes, 2,500 EUR
  • Maximal deposit: no
  • Minimum ongoing balance: no
  • Monthly fee: no
  • Online banking: yes
  • Interest payment: annually
  • Interest rates up to 2% guaranteed
  • Terms of 12, 24, 36, 48 and 60 months
  • 100% deposit protection for up to 100,000 EUR

Interest rates

Deposit durationInterest rate
1 year1,3%
2 years1,8%
3 years1,85%
4 years1,90%
5 years2,0%

3. IKB – German Industrial Bank

  • Minimum initial deposit: yes, 5,000 EUR
  • Maximal deposit: 250,000 EUR
  • Minimum ongoing balance: no
  • Monthly fee: no
  • Online banking and account management: yes
  • Interest payment: annually
  • Interest rate of up to 2%
  • Available terms: from 1 month to 10 years
  • 100% deposit protection for up to 100,000 EUR

Interest rates

  • 1 month – 0,3%
  • 1 year – 1,25%
  • 2 years – 1,75%
  • 3 years – 2,0%
  • 10 years – 2,0%

Additionally, you can compare and choose the best fixed deposit account in Germany below:

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Taxes on savings account

In Germany, everyone must pay taxes on interest rates from savings accounts. This income is classified as capital gains, which are taxed at a 25% rate. plus 5,5% solidarity surcharge. In total, it comes to about 26.375%.

The good news is that you don’t have to pay taxes until you reach a certain amount in gains from interest rates. In 2022, it’s 801 EUR for an individual who files taxes as a single or 1,602 EUR as a married.

How to open a savings account in Germany as a foreigner?

If you already have a current account at some bank, you can usually open a savings account with them. Opening an instant access savings account is pretty simple at most banks. Nowadays, savings accounts are also accessible online, so you don’t have to visit a branch.

The main steps of opening a savings account in Germany:

1. Identification and legitimation

To confirm your identity, you must go through the Postident procedure.

During this procedure, you present your ID documents at the nearest post office or alternatively use the video identification procedure. You can use your German ID or passport with the registration confirmation.

2. Drawing up and signing the savings account contract

After you go through identification, you will be given a contract with all terms and conditions. This document states the agreed interest rate, as well as the investment period and the amount you deposit.

The account agreement is usually created electronically during the account opening process. Once you sign the contract, your will be finally opened.

3. Money deposit

Now you can deposit the money into your account. The bank usually will collect it from the current account that you have mentioned in the agreement, or you can make a cash deposit.

4. Setting up taxes

To avoid paying taxes on your gained interest, you must submit an exemption to the tax office. If it doesn’t get done, the bank will transfer the portion of your earned money to the tax office.

In Germany, each taxpayer receives a maximum of 801 EUR as a single or 1,602 EUR as a married in tax-free allowance every year.

Fixed deposit accounts

To open a fixed deposit account, you often need to have an instant access savings account.

Requirements

Requirements for savings accounts aren’t high in Germany. The main criteria is your international ID or residence permit in Germany. Plus, you need money for an initial minimum deposit if you choose a fixed account, but an instant access account can be opened at no cost.

For both types of accounts, you must have a checking or current account in a German or European bank so it can be connected to your savings account.

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Anna

Anna is an enthusiastic expatriate with experience of living in Germany, Austria and Greece. She shares her passion for living abroad on this website.

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