So you’re settled in Germany and have put some money aside? Good on you! But know you might ask yourself where to put your money… Of course you could just leave it on your normal bank account, but chances are high that it then somehow disappears. And by “disappear” I mean you spend it for shopping, partying and so on 🙂 If you want to avoid this, it makes sense to put this money on a separate savings account. In this article we are going to describe what options you have and give a comparison of the best German savings accounts.
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What types of savings accounts are there in Germany?
Instant access savings account – in German “Tagesgeldkonto”
The instant access savings account is probably the most common savings account in Germany. As the name says, you can access your money instantly, which means you can transfer it whenever you want from your savings account back to your normal bank account. Interest rates are usually higher than on your normal bank account (if there are any…) but lower than on a fixed deposit account (see more in next paragraph). Below you can find a comparison of the best German instant access savings accounts:
Fixed deposit account – in German “Festgeldkonto
Unlike the instant access savings account, you cannot dispose of your money instantly with the fixed deposit account. Usually your money is “blocked” for at least 12 months up to a few years. Of course it’s your decision, for how long you want to invest your money. Because of the longer investment period, interest rates are higher than for the instant access savings account. Here is a comparison of the best fixed deposit accounts in Germany (you can select your investment period under “Anlagedauer”):
Is my money safe?
Generally speaking… yes. For bank accounts within the European Union there is a general deposit insurance of 100.000 EUR per bank account. Most of the above bank accounts presented in the above comparisons are located in the European Union.
For most German savings accounts, the deposit insurance is even higher. For example the deposit insurance of TARGOBANK covers deposits of up to 405.007.000€. Yes that’s correct… over 400 million Euros! So absolutely nothing to worry about.
How does it work with taxes?*
Well, taxes in Germany… Definitely a difficult story! The money you make with your savings account in Germany is classified as income from capital (in German “Einkünfte aus Kapitalvermögen”). For this type of income there is a flat tax rate of approx. 26% (the so-called “Abgeltungssteuer”). So for every Euro you make from interest, you have to pay 25 cents taxes. However there is an allowance of 801 EUR per year, which means that the first 801 EUR earned from interest are tax-free. For more details on the taxation of income from your savings account, you can check this Wikipedia article.
*With regards to the section “How does it work with taxes?”, this is no official tax advice and just a general information about the taxation of income from interest. I’m not a professional tax advisor. If you need assistance please get in touch with an official tax advisor.
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