What you should know about bank giro accounts

Which card should it be?

Depending on wishes and financial possibilities of the consumer, the banks offer different cards.

With the customer card you can only print account statements and withdraw money at the counter.

The giro card offers to withdraw cash from an ATM, additionally. At the distributor consumers can pay for their goods by entering the secret number (electronic cash) or by signing (direct debit authorization). Who uses the giro card with money chip can also pay little amounts at an automat.

For this the chip will be topped up with cash and serves as an electronic wallet. So, for example, you do not need change for parking fees or tickets of the public transport. The disadvantage: If the card gets lost, the money is gone, too. In the future contactless payments shall be possible with the money chip.

The money chip is modified by the so-called NFC-Chip (Near Field Communication).

With the credit card and signature or PIN (personal identification number) account holders can pay worldwide cashless at all contracting parties of the credit card company. Who does not shy away from the sometimes high fees and has the PIN at hand can also withdraw cash at ATMs.

The so-called revolving credit card exists for years in the USA and Great Britain. In Germany these revolving cards with partial payment function get more popular, too. With conventional credit cards, the complete amount is due at the end of the month and will be debited from the account.

The instalment-credit card works differently: At the end of the month (depending on the supplier) the consumer just has to pay a determined percentage of the aggregate balance for example. For this flexible service the institute charges high interests and high costs. The variants at the market are very versatile. The Problem for consumers: They can barely see whether it is a revolving-credit card or not. And such a card increases the risk to buy things on tick, which you actually cannot afford, and to lose the overview.

Therefore, the Consumer Association cautions against revolving-credit cards and the linked risk to become overindebted.

Different types of bank accounts

There are more account types for transactions than the standard salary account. Especially spouses can choose between several options. A salary account is a giro account which receives a regular income from the account holder. Only a few banks offer an interest on the balance. Nevertheless, it is worth asking.

Private giro accounts, which receive no salary, can also be created as rent accounts (Mietkonto), building accounts or accounts for school trips etc. For customers with a bad financial situation or those, who are rated with an inadequate creditworthiness by credit institutes, a credit account is useful. Owners of such accounts can only receive credits and make payments within the asset. If the account balance is negative, the account will be blocked.

More people can rule over a joint account. Depending on the account type you have different rights and duties. There are two types of accounts – a joint account with the option‚ both or all to sign (Und-Konto) and a joint account with the option‚ either to sign (Oder-Konto).

With the so-called Und-Konto the account holders – mostly spouses or communities of heirs – can only dispose together. In practical handling it can cause problems, because all account holders need to sign for all disbursements and transactions. This is only sensible, if everybody shall always have control over all transactions on the account. And you also depend on others in the case of death: If one of the account holders dies, the other one can only dispose together with the heirs. And vice versa the hands of the creditors are tied, too.

Creditors can seize the account only if there is an attachment and transfer order against every single account holder. If only one of the spouses is in debts, the common balance on the Und-Konto must not be touched.

With the so-called Oder-Konto it’s the other way around. Every account holder can make his financial transactions independent from the others. This independence has one disadvantage: Even if only one of the account holders has debts, the joint account can be seized. For example, if the wife buys a new refrigerator and does not pay, the husband is liable, too. Tip: Spouses in debt should better decide for two individual accounts with mutual account authorisation or an Und-Konto.

With a security transaction account (Wertpapiertransaktionskonto), consumers can transact their securities transactions.On this account you, for example, transfer a monthly amount and then buy fund shares or shares depending on the assignment. Unlike the salary account, there are usually interests for the balance. Only a limited category of persons are allowed to keep an escrow account.

For example notaries, lawyers or tax consultants handle the payments of their clients over such a special account. In case of buying a house, for example, the purchaser transfers the purchase price on a notary trust account, whence the payment is processed. This is the safest payment method both for buyer and seller, so both should insist on it.

Garnishment protection account (Pfändungsschutzkonto or just P-Konto): The subsistence level remains automatically available

So far debtors had to apply and enforce at the court or the seizing authority, that a monthly allowance remains. With the garnishment protection account an amount of 1.178,59 Euro is automatically protected. Protected are for example work income, pensions and social benefits as well as cash gifts of a third person.

As account holder you do not have to do anything more. In case of an attachment you still have full access to your account and you can make transfers up to your allowance.

However: Whereas a garnishment protection account offers more scope for indebted persons, it is not recommended for account holders that are in the black. A possible report to the SCHUFA for example could impair your creditworthiness.

Answers to frequently asked questions

Right to a basic account

Every consumer is entitled to a payment account with standard functions (basic account) since the 18 June 2016. Also for homeless people, asylum seekers and tolerated persons.

The basic account has to allow at least deposits and cashouts in cash, debits, transfers and card payments. If the respective bank offers to keep giro accounts online in general, this has to be possible for the basic account, too. The bank can demand reasonable account management fees.

Cancel your account

Holders of an account can normally and any time without notice cancel their account. An agreed notice period, that is longer than a month, is inadmissible.

Whereas if the bank wants to end the business relationship, it has to set a reasonable deadline (at least two months). The account holder must have enough time, to repay his overdraft facility and to open a new account at another credit institute. For the closing of the account there must not be costs. Far more often banks cancel the account without previous notice.

This is only premitted, if an important reason exists. Important reasons are for example if the customer makes false statements about his financial situation or he insults the bank staff. No important reasons are an one-time account seizing or an impermissible overdraft of the account.