Why Don’t Germans Use Credit Cards?

Abroad, especially in the US, it’s common to pay for purchases with a credit card, but the situation looks very different in Germany. The proportion of Germans who use credit cards is incredibly small compared to North America, so you might be wondering why?

People in Germany prefer cash and debit card payments over anything else. For purchases, they have a special debit card that works only in Europe and only in physical stores – EC card.

How Germans rate credit cards:

  • Security for financial losses – 21 out of 100
  • Overview of expenses – 16 out of 100
  • Ease of use – 26 out of 100
  • Privacy – 8 out of 100
  • Broad spectrum of usage – 38 out of 100
  • Familiarity – 24 out of 100

Furthermore, there are still businesses in Germany that don’t accept credit cards because they must pay fees. Credit card providers get at least 2% or 3% from each transaction, taking a part of a firm’s profit margins away.

That’s why many German shops set a minimum amount for credit card purchases. In the end, the reason why the German population is so credit cards averse have very deep underlying principles, which are also connected to the culture. Read this article to understand more about credit card usage in Germany and why it’s so minor.

Cash culture in Germany is still strong

Germany is still obsessed with cash. Firstly, Germans love and trust cash above everything. They literally cannot imagine a world without cash. Germany’s most popular payment methods are cash, debit card, or Girocard (an interbank card). 

The average German citizen prefers to pay either cash or a Girocard, a German version of a debit card. In the end, cash gives the feeling of keeping track of the money you spend, and Germans don’t like spending more than they have planned.

Furthermore, a typical German carries the equivalent of about $123 in cash in their wallet, nearly twice as much as Australians, Americans, the French, or the Dutch typically have.

Besides, a study by the Bundesbank shows that 53% of private purchases in Germany are paid in cash. A third of all participants even stated that they pay exclusively in cash. Indeed, cash payments are prevalent among pensioners, and Germany is an aging country, with a large number of elderly.

Despite Germany being Europe’s leading economy and famous for technological know-how, the country isn’t in a rush to say bye to the cash. At the same time, many European neighbors like the Netherlands almost entirely function on cash-free payments. Even in the supermarket, you can’t pay with banknotes.

Whereas Germans just prefer their cash. It’s secure, quick, and easy to use, they argue. That way, they can see a clear picture of personal spending, keep transactions more private, and cash is still widely accepted in the country.

Nowadays, it’s hard to get in a situation where cash isn’t accepted, but that often can happen with cards, particularly credit cards.

Furthermore, most Germans don’t use their credit cards daily as Americans would. In Germany, they are primarily used for online shopping.

That doesn’t mean Germans don’t benefit from modern payment methods. In 2018, Germans used cards for payments more than cash for the first time. According to a report made in Cologne, 48,6% of sales were made with a debit or credit card, and 48,3% with cash.

A recent survey by YouGov revealed that 72% of Germans think it’s “safer” to pay with cash. The Bundesbank, Germany’s central bank, recently estimated that 79% of financial transactions in Germany are made in cash, while in Britain and the USA, that figure is under 50%.

Many people have searched for an answer to why Germans and Swiss, and Austrians are so much into cash than most other nationalities.

Nonetheless, Germany has one of the highest rates of cash used in the European Union. The most significant reasons for choosing cash over card are German’s needs for:

  • protection of personal data
  • security
  • confidentiality of payments
  • simple and universal usability

The cause mainly lies in the need for security and data protection. You can have it only in cash. Plus, the use of cash for most transactions seems to be deeply ingrained in the German culture.

Moreover, you can even pay large purchases in cash because German banknotes are the best for it. There is a 500 EUR banknote which is worth about $565 today.

In Switzerland, they have a 1,000-franc (CHF) banknote, the largest banknote in the world. Today it’s worth just a little over $1,000 US.

Can you as a foreigner get a credit card in Germany?

So what are the reasons behind German cash obsession?

Germans simply handle money is very different from the way North Americans do. They love cash and are opposed to credit cards. Even checks, so popular in France, are a rarity.

Most Germans pay their monthly bills via free money transfers called Geldüberweisung, which are available and free in all EU countries. However, cash is still king when it comes to in-person purchases, even in a German department store or restaurant.

Secondly, security and data protection are critical to Germans. They avoid payments with cards due to possible data misuse. Privacy is a big word for Germany.

Thirdly, cards were expensive in the past. A few years ago, merchants and even supermarkets had to pay high fees for transactions made with cards, while paying in cash cost them nothing.

Yet, today Germans use cards more often than before, especially the young generation. Besides, 20% of Germans aged between 14 to 29 even pay with their smartphones.

Germans and credit cards

According to a survey by the Bundesbank on payment behavior in Germany, 36% of people own a credit card. Ten years ago, the figure was just 27%. Hence, today, one in three people in Germany owns a credit card.

However, owning the card doesn’t mean using it. The frequency has hardly changed in the past 10 years. Only one of 67 payments is made with a credit card in Germany.

In total, only 1,5% of all transactions in Germany are made with a credit card, while 74,3% of them are made with cash and 18,4% with the Girocard – the German version of a debit card.

Nowadays, there are around 30 million credit cards and 100 million debit cards, known as EC-card or Girocard.

Even the best credit cards have difficulties competing with German EC – Girocard. It’s everything for Germans. Girocards are often used for buying something in a store or business, but they are usually not accepted by international retailers online.

Like a debit card in the US, the money is transferred immediately from the cardholder’s account to the seller’s account.

Hence, Girocard is much more preferable by the German population. If you need to overdraft with Girocard, it will first use the existing money on the account, and if it’s not sufficient, you will deep into credit that is granted with some interest.

The amount of credit you get is estimated by the ordinary income, so you don’t spend above and beyond your typical budget.

On the other hand, a credit card is usually used for travel and sometimes internet purchases in Germany.

Credit cards from brands like Visa, Mastercard, American Express and Diners Club are used by many Germans but definitely not in their everyday lives. EC card is a solution for daily shopping.

From the German point of view, there is little to no benefit to using a credit card over cash or the classic bank card.

Germans want security

The suspicion and doubts among Germans are even greater when it comes to credit cards. In fact, 30% of the surveyed people in Germany assume that their privacy will be protected when using EC cards, compared with only 8% in the case of credit cards. And 93% believe they are secure when paying cash. Insane right!

Losing control over spendings

Germans are also afraid of losing the overview and control over their spendings when using cashless payments. Since most credit card providers send you statements only once per month, you can quickly lose the idea of the monthly expenses.

But of course, you can see your balance statements online. Just don’t forget to check frequently.

Germans hate debt

There is also a cultural part of it – Germans hate debts and are very averse to them. People rarely take credit or loans, mostly when they purchase real estate. All other items are financed out of personal savings.

In general, being in debt is frowned upon. Even a car financed via credit is already a questionable decision.

Fees

Many credit cards charge additional fees, firstly monthly fees for even having them and secondly, transaction fees. Taking out cash with a credit card is also prohibitively expensive. Credit cards are also more costly for merchants to accept as payment.

Example of fees for a merchant when paying with EC vs credit card:

  • EC-card: 0,95%
  • Credit card: 2,75%

However, nowadays, most merchants in Germany have credit cards as payment. The number has significantly increased in recent years. Even discounters such as Lidl and Aldi now accept them. Contactless payments are available for up to 25 EUR at the checkout. Above that, you will need to type your pin.

Not every “credit card” is a credit card

There are three types of payment cards in Germany that are often called “credit cards,” but not all of them are real credit cards:

  • Real credit cards, where all purchases go into the balance, of which then a percentage is repaid every month.
  • Charge cards, where all purchases of the current month are paid in one invoice.
  • Debit cards, where purchases are directly debited to the cardholder’s bank account.

Moreover, there are also prepaid cards which are hybrid versions of the first two versions.

What are charge cards? Charge cards have similar features to the standard credit card. Yet some differences include:

  • charge cards allow unlimited spending and
  • they don’t charge interest
  • they must be paid in full each month
  • missed payments are reported and can substantially affect a borrower’s credit score (SCHUFA)

Only a few Germans do use real credit cards. They just don’t see value in them. Plus, German society is very debt-averse. Most banks will grant you some overdraft allowance with a standard card anyway, so why even bother with credit cards?

Another reason for not using credit cards is high interest rates. EC/Girocards and charge cards usually offer lower fees.

What do Germans think of credit cards?

Germans rate credit cards poorly for most criteria:

Point (100 max.)Credit CardCashGirocard – German debit card
  • Security for financial losses
  • 214246
  • Overview of expenses
  • 169052
  • Ease of use
  • 269870
  • Privacy
  • 89630
  • A wide spectrum of usage
  • 388076
  • Familiarity
  • 249872
    Source: Deutsche Bundesbank

    Cash continues to win in almost all of these criteria by far. No surprise, cash is still a preferred payment way. In 7 out of 10 cases, Germans still pay cash at the checkout. In the US, on the other hand, people have been using cards more often than cash in their everyday lives for many years.

    In the US, credit cards have a significant role in consumption behavior. There is hardly any skepticism about card payments. Germans are much more reluctant when it comes to cards.

    Credit cards are still much less popular even when German Girocards (EC) aren’t suitable for e-commerce. The credit card’s share of all sales fell slightly recently to 11%. Germans prefer to make purchases online via their bank account (28%), through direct debit (20%), and Paypal (20%).

    German banking system

    The German banking system also contributes to the fact that you won’t need a credit card in Germany. Most banks will have an overdraft facility on your bank account so that you can go in minus. It will cost you some interest, which is usually pretty reasonable.

    German banks also have so-called charge cards that directly debit the amount on the check/receipt/invoice from the bank account.

    Fees for these cards are very low, and the retailer/shop/restaurant cost is much lower than a normal credit card.

    Credit cards are much more expensive for the buyer and the merchant. Hence, Germans predominately use charge cards instead of credit cards. Fees are the main reason.

    A credit card charges the retailer/shop/restaurant between 1.5% and 6% for a credit card transaction. The charge card charges only a small fixed amount of between 0.2% and 1%.

    How many people do have a credit card in Germany?

    Currently, there are 40,557 million credit cards in Germany. Yet, only every 14th resident in Germany has a real credit card. Many have charge or debit cards instead. Nonetheless, Germans call all those cards “credit,” but most of them don’t have a credit function. Hence, most Germans use so-called debit cards.

    The number of debit cards increased by more than 60% in recent years. Debit cards have a share of 85% among all credit card types used in Germany.

    More interesting, however, is that number of real credit cards, i.e., with a credit function, is decreasing in Germany. The total percentage fell slightly in recent years from 15,52% to 14,40% of all cards used in the country.

    Only 5.84 million or 14,4% out of all credit cards used in Germany are real credit cards. The other 34,72 million are just regular debit/charge/prepaid cards.

    Most credit cards in Germany belong to Visa, Mastercard, American Express, Barclay card, Diners Club, and others.

    Furthermore, around 25.3 million credit cards were issued in 2010. The number was about 37.3 million in 2019. At the same time, approximately 1.58 billion transactions were made with credit cards in Germany in 2020 for a total of 95,74 million EUR.

    Best credit cards in Germany

    There are so many things to be aware of when looking for a credit card in Germany. The credit card market is still not very developed in the country, with only a few providers. You can get a free credit card or credit card, which involves a monthly fee.

    The benefits of having a credit card in Germany are:

    • Credit line when you need money
    • Reasonable repayment conditions
    • Low costs
    • No fees abroad
    • Free cash withdraw
    • Various benefits from discounts to insurances
    • Easy online shopping

    Most popular credit cards in Germany

    • Barclays Visa card
    • Payback American Express
    • Free Mastercard Gold
    • DKB Visa Card
    • Awa7 Visa Card
    • Free Santander BestCard Basic
    • 1822direkt Classic Credit Card

    1. Barclays Visa card

    Barclays Visa card is one of the most popular credit cards in Germany. It’s a free credit card that you can use in Germany and other countries at no cost. The main advantage of this card is that you can pay and withdraw money in any currency and in any country for free. 

    You can get the Barclays Visa without opening a current account with Barclays bank.

    Highlights of Barclays card:

    • VISA credit card
    • No monthly fee
    • Free worldwide cash withdrawals 
    • Free worldwide payments
    • 0% interest rate for spendings under 500 EUR; otherwise interest rate is 18.38%
    • No fees for transactions in foreign currencies
    • Online application via video legitimation or PostIdent

    Things to keep in mind:

    • Free cash withdrawals apply to amounts from 50 EUR
    • For a successful application, a good credit score is required

    Read full review here.

    2. Payback American Express

    Payback American Express is a free credit card from one of the world’s renowned providers. The payback feature allows you to collect points while spending money in all stores except gas stations.

    Highlights of Payback American Express:

    • AMEX credit card
    • No monthly fee
    • Payments are free with EUR zone
    • Online application via video legitimation or PostIdent

    How much is payback? You can earn 1 Payback loyalty point for every 2 EUR spent. 100 Payback points are worth 1 EUR.

    Things to know:

    1. A fee of 2% applies for payments outside the EUR zone. Plus, you need to pay 4% commissions for cash withdrawals. Hence, this card is good if you plan to spend money within the EU. 

    3. Free Mastercard Gold

    Free Mastercard Gold is another great free credit card in Germany. You can benefit greatly from it when watching out the terms and conditions.

    InfoAdvanzia
    Card typeCharge Mastercard
    Monthly feesNone
    Cash withdrawal in Germany None
    Cash withdrawal abroad (non-EU)None
    Cash-back 5%
    Payments in Germany Free
    Payments abroad (non-EU)Free

    Highlights of Free Mastercard Gold:

    • Free Mastercard credit card
    • No monthly or annual fees
    • No fees for payments in foreign currency – worldwide free payments
    • No current account needed
    • Easy application process (no PostIdent required)
    • Interest-free credit for up to 7 weeks
    • 24/7 customer service

    Things to know:

    1. Learn about all credit card conditions before you sign up, there are many details to it.
    2. When withdrawing the cash interest rate of 1.49% per month will apply.
    3. No automatic deduction of monthly bills from a bank account.

    4. DKB Visa Card

    A credit card from DKB is one of Germany’s best free credit cards. They also offer a free bank account. Moreover, the DKB Visa card offers excellent perks and conditions.

    The DKB Visa Card has been around for a long time and is one of Germany’s well-known credit cards. When signing for their card, you will get a regular current account (Girokonto) with a free Visa card.

    InfoDKB
    Card typeCharge Visa
    Monthly feesNone
    Cash withdrawal in Germany Free
    Cash withdrawal abroad (non-EU)2% but free for active customers
    Cash-back Up to 20%
    Payments in Germany Free
    Payments abroad (non-EU)2% but free for active customers

    To be an active customer, you need to have a monthly turnover of at least 700 EUR per month.

    Highlights of DKB – Girokonto Visa Card:

    • Free bank account
    • Free credit and debit card
    • Online banking
    • Worldwide free cash withdrawal with Visa card at ATMs
    • Open account online
    • Free emergency card and emergency cash
    • Up to 20% online cash-back
    • International student card (ISIC) for worldwide discounts

    DKB offers a charge card, which is so preferred by Germans. The bank doesn’t charge you until the end of the month. You don’t have to pay any interest until then. Hence, charge banks are the best for short-term financing.

    With the DKB Visa credit card, you benefit from both free withdrawals and fee-free payments in Germany and abroad. To get a DKB Visa card, you need to sign for their free bank account first. Hence, a visa credit card will accompany a standard current bank account. Both of them are free.

    Things to know:

    1. The minimum amount for free cash withdrawal at ATMs is 50 EUR.
    2. Monthly deposit of 700 EUR guarantees the best conditions for the card.

    5. Awa7 Visa Card

    Awa7 Visa is one of our favorites on the list. It’s a German free credit card. Moreover, with a card from Awa7, you can apply for an immediate credit of up to 2,500 EUR. You can even benefit from a zero credit interest rate when paying back the money within the first 3 months.

    InfoAwa7
    Card typeRevolving
    Monthly feesNone
    Cash withdrawal in Germany Free
    Cash withdrawal abroad (non-EU)Free
    Cash-back 5%
    Payments in Germany Free
    Payments abroad (non-EU)Free

    Highlights of Awa7 Visa Card:

    • Free Visa credit card
    • Free cash withdrawals worldwide
    • Online legitimation possible
    • Credit line for up to 2,500 EUR
    • Either pay in monthly installments or balance out your monthly bill in one go
    • Zero credit interest rate
    • 12-month online shopping insurance

    This card by far outweighs most credit card options in Germany.

    6. 1822direkt Classic Credit Card

    Bank 1822direkt is a part of well known German Sparkasse. They offer a wide range of credit cards and loans.

    Info1822direkt
    Card typeRevolving Visa
    Monthly feesNone
    Cash withdrawal in Germany 2% but free with a debit card
    Cash withdrawal abroad (non-EU)1,75%
    Cash-back 5%
    Payments in Germany Free
    Payments abroad (non-EU)1,75%

    Highlights of 1822direkt Classic Credit Card:

    • Get a 250 EUR bonus as a new client
    • Visa or Mastercard credit card free of charge inclusive
    • Free debit card and free current account included
    • First year is free (free afterward with turnover over 700 EUR per month)
    • 6 free cash withdrawals with a credit card
    • Unlimited free cash withdrawals with a debit card at all Sparkasse ATMs in Germany (over 25,000)
    • Interest rate 7,17%
    • Fast account opening with Video-Ident or PostIdent

    Things to know:

    1. Visa or Mastercard credit card free of charge with the year’s turnover exceeding 4,000 EUR (or 700 EUR per month) otherwise 3,90 EUR monthly fee.
    2. Cash withdrawals outside the EU are subject to a fee of 1,75%.

    We also recommend you to read “Best bank accounts for students in Germany” so you can pick the optimal one for your situation.

    7. Santander BestCard Basic

    Santander is a large bank known worldwide, including in Germany. They offer several credit cards, but Free Santander BestCard Basic is the best option for expats, employees, and students in Germany. Students can get a credit card even without a regular income but with a lower credit limit.

    The card is also suitable for regular travelers who mainly travel within the EU since withdrawing cash and paying in EURO with a Santander credit card is free.

    InfoSantander
    Card typeRevolving Visa
    Monthly feesNone
    Cash withdrawal in Germany Free
    Cash withdrawal abroad (non-EU)Free
    Payments in Germany Free
    Payments abroad (non-EU)1,5%

    Highlights of Free BestCard Basic:

    • Free Visa credit card
    • Free cash withdraw up to 4 times per month after 1% fee applies
    • Paying in EUR is free
    • No need to open a current account
    • 24/7 customer service
    • Credit limit up to 2,000 EUR
    • Interest rate 13,98 %
    • Pay credit back in 28 days with zero interest

    Things to know:

    1. 1.5% foreign transaction fee applies when paying in non EURO currency
    2. Max. 4 free cash withdrawals per month

    Best debit cards in Germany

    For your daily purchases in Germany, you can use a debit card. DKB bank and Consorsbank are some of the best providers.

    Consorsbank – debit card and bank account

    Consorsbank has existed since 1994 and is well established direct bank in Germany. Their bank account, the Girocard, and Visa debit card are free. In general, the Consorsbank account is worthwhile for anyone in Germany, from students to self-employed or employees. 

    Info
    Card typeVisa Debit
    Monthly feesNone
    Cash withdrawal in Germany Free
    Cash withdrawal abroad (non-EU)1,75%
    Payments in Germany Free
    Payments abroad (non-EU)Free

    Requirements for credit cards in Germany

    Applying for a credit card in Germany is pretty straightforward. In some cases, you will need to prove creditworthiness (SCHUFA) in some not.

    Usually, you will need to have a current account at the German bank first to get a credit card. Some credit card providers we listed above don’t have this requirement, like Advanzia or Santander, for example.

    Another condition is to have an address in Germany. It also should be your primary country of residency.

    Despite that fact, many credit card providers will accept applications from EU residents.

    In addition, having a regular income will greatly help you to get a credit card in Germany. Nevertheless, you should always make sure that you can pay back the money you spend with a credit card.

    If you are thinking about a loan or credit line in Germany, an article about taking a loan in Germany might be helpful.

    Can you use your credit card in Germany?

    Westerners, especially North Americans, are often frustrated by Germany’s lack of credit card acceptance. It’s much more common for Americans and Canadians to pay with a card, whether debit or credit.

    For example, 10 years ago, it was a hustle to pay with a credit card in Germany. Merchants would not accept it. Back them, it was only possible to pay with EC – Girocard.

    Today the situation looks completely different, and credit cards like Visa and Mastercard are widely accepted in Germany. American Express and Diners Club credit cards are accepted in fewer locations.

    Nonetheless, there are still places in German-speaking Europe where American Express, MasterCard, or Visa can be useless. At the same time, there is hardly a supermarket, gas station, store, fashion store, bakery, or bookstore chain in Germany where these cards (classic credit card, debit card, or prepaid credit card) aren’t accepted.

    Only small local retailers, stores, or in smaller towns, the acceptance can still be limited, but even these “white spots” are disappearing from the map. So no reason for panic, my American friend. Almost any credit card is accepted in Germany. You can use them:

    • for payments at local merchants and restaurants
    • to pay at merchants abroad
    • to make payments on the internet
    • to pay and make deposits in hotel&car rentals, etc.
    • to withdrawn money

    Recommended products and services in Germany:

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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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