Savings Accounts in Germany

Savings accounts pay interest on your money. There are two types:

• money market account (German: Tagesgeld) and
• fixed-term deposit account (German: Festgeld).

Questions & Answers

Which type of saving account is right for me?

It depends on how accessible your money shall be:

• Money market (Tagesgeld) deposit accounts let you add and withdraw money all the time.
• Fixed-term or fixed deposits (Festgeld) let you access your money only after the term ends.

However, fixed deposits usually offer a higher interest rate.

How is my money protected?

Cash deposits of individual customers in the EU are insured under a deposit guarantee scheme of the country where the bank is registered in."requires all member states to have a deposit guarantee scheme" – source, retrieved 2022-07-27 The insurance sum is currently in every country €100,000 (or equivalent).

So even if a bank goes bankrupt, your money up to €100,000 will be safe, guaranteed by the government of the bank's country.

This of course only helps if the country itself does not go bankrupt. For that reason, some people also pay attention to which country the bank is registered in.

Are the interest rates fixed?

• With money market accounts, the interest rate is not fixed. It can change from day to day.
• Fixed-term accounts offer a fixed interest rate.

However, you will notice that interest rates in the Eurozone are very low. If you consider investing into shares and ETFs, check the List of German Brokers.

Are interest payments taxed?

• Yes, in Germany capital gains from savings accounts are taxed with the Withholding Tax. "The Abgeltungsteuer (German, from Abgeltung "settlement", "discharge" + Steuer "tax") is a flat tax on private income from capital." – Abgeltungsteuer source, retrieved 2022-07-27
• Basically, you pay 25% flat on your earnings.
• However, there's an allowance of €801 per year. It means that if you have earned less than €801 on interest payments in a year, you pay no Withholding Tax on this sum. Only earnings above will be taxed.
• When using a German bank for your savings, the bank automatically deducts your tax payments. If you want them to automatically respect your allowance, you can give them an exemption order (Freistellungsauftrag).

See also

• Withholding Tax (Abgeltungsteuer) on Capital Gains by germantaxes.de