Here are a few money matters from my experience. If I’ve left anything out, feel free to ask any questions in the comments.
Paying Bills. Germans pay almost all their bills via electronic bank transfer. For recurring bills such as kindergarten tuition, the transfer is made sometime at the beginning of each month.
However, there are two options for this: manual and automatic. Manual is just that – you sign in to your online banking website and set up a money transfer. If this is a pain in the rear end, just sign up for automatic transfers which allow the payee to deduct the bill amount from your account (usually around the 10th of the month).
I find the electronic bill pay system in Germany to be much more safe than in the US (or at least it has a better illusion of being so). Not only do you have to enter a customer number and PIN to access the online account, but you must enter what is called a TAN number to complete the transaction. This TAN number is different every time, and it’s only possible to enter it correctly if you have the physical list of TAN numbers in front of you.
But, what about checks? Honestly, I’ve never seen one, and I’ve never heard Germans mention them. It’s my understanding that checks just aren’t used here. And why would they be? The electronic transfer is much more efficient (and therefore, more German!).
Getting Paid. In the absence of checks, employees in Germany are almost always paid by direct deposit and usually only once per month. As a fan of biweekly paychecks, I wasn’t thrilled with the idea of only twelve paychecks per year. But, since most bills are due at the beginning of the month and the only things left to worry about for the rest of the month are groceries and pay-as-you-go cell phone minutes, it ends up being okay.
Reimbursements for travel and other job-related expenses are also paid to the employee via direct deposit. Unfortunately, these payments tend to take much longer than we are used to in America. Six months seems to be the norm in our experience. I guess the efficiency of the German way (organization) comes at a price (waiting, waiting, waiting…).
And, by the way, very few German bank accounts are free. Usually, accounts cost around 5 or 10 euros per month (though this expense is often charged quarterly). This monthly fee is supposed to offset the cost of transaction charges and provide account protection and security services for the account holder.
Spending Money. When paying for items in Germany, the customer has two main options: cash or debit. It’s true that credit cards exist, but they are not as common. (And, the banks won’t issue them to foreigners unless said foreigners will be in the country legally for more than one year.)
Everyone takes cash, but not every shop takes debit cards. In cities, bigger stores are guaranteed to do so. But, smaller towns and mom-and-pop businesses often do not. As such, I always keep a 20-euro bill in my purse for such situations.
The debit cards here function mostly the same as at home. Insert card, enter PIN, complete transaction. Some stores do not have machines for PIN numbers; instead, the customer must sign a sales slip agreeing to the amount (as in a typical credit card transaction).
But German debit cards haves something extra, a chip on the front of the card. The user can load money on this chip from their bank ATM, activating the Geldkarte feature. A Geldkarte functions more like pretend cash than a debit card. No PIN is required to spend the balance on the chip, and banks make no money on Geldkarte transactions. It’s a less secure means of payment, but some automatic machines (such as those for public transportation and cigarette dispensers) only accept Geldkarte or cash.
How does the German banking system differ from banking where you are?