Having your own credit card will make it much easier for you to make payments and manage your money in Germany. But as an expat, what should you know about getting your own card?
July 20, 2021 — 7 min read
If you’re planning to move to Germany, or have recently arrived in the country, a credit card can make your life easier. It offers freedom and convenience--two things every expat needs.
Of course, you'll need to open an account with a German bank and have a permanent address to obtain a credit card. But which of the available credit cards should you choose? And which ones are going to be the best-suited for your current situation?
To help you make an informed decision, we’ve created this useful guide that tells you everything you need to know about the best credit cards in Germany for expats.
The most popular payment methods in Germany are cash, debit card, or girocard (an interbank card). But there are instances when these payment options aren’t acceptable or are too expensive to use. In such cases, you require a credit card with a large credit limit.
For instance, it wouldn’t be appropriate to use cash for a large payment running into thousands of Euros, and a girocard’s transaction fees would go through the roof. A credit card is more economical in such cases, whether you’re paying for something abroad or in Germany. Also, credit cards are widely accepted overseas and are best for making international payments, withdrawals, and online payments.
Applying for a credit card in Germany is straightforward. You’ll need to have a current account (called a “Girokonto” in Germany) with regular revenue to link the card to and a document proving your permanent address--a signed document by your landlord (Wohnungsgeberbestätigung). And you’ll also need to have an identification document such as a passport.
In addition, you’ll need to have a good credit score, known as SCHUFA points. The SCHUFA Holding AG is Germany's credit agency that tracks financial transactions and rates creditworthiness on a 0-100 grading system. A score of 85 and above can help you qualify for a large-limit credit card. You can build your credit score by paying your loans and bills on time.
When you hear a German asking whether they can pay for their shopping by card, they are usually not referring to a credit card, but a girocard or a debit card. The term credit card (Kreditkarte) may refer to any of the following cards in Germany:
Charge credit cards are the most popular in Germany, but they aren’t credit cards in the true sense of the word. The card is linked to a checking account, and the bank directly deducts the whole amount you’ve used in one calendar month. If the account has no sufficient funds, your balance goes into overdraft.
Most people new to Germany use revolving credit cards as they fit their typical definition of a credit card. The card gives you actual credit, and every purchase you make is deducted from the total amount. You get a credit card bill at the end of the month and pay it by a specified date. If you pay the full amount on time, you won't pay any interest. But most credit card providers offer the option of paying in installments then charge hefty interest.
This card must be loaded with money before it's used. You don't get actual credit, however, you control your spending and stay within your budget. Also, you don't need a good SCHUFA score to get one.
If you like traveling or get paid in a foreign currency, the Hanseatic Bank GenialCard is a great option. This Visa credit card is 100% free and doesn’t attract an annual fee or a foreign currency fee. You can link it to your checking account and withdraw cash worldwide at no charge, unless the ATM provider imposes external fees. The revolving credit card supports 100% SEPA direct debit, and you can turn it into a charge credit card.
Upon signing up, your credit limit may be pushed up to €2500 euros, and the card offers Apple Pay and Google Pay options. You can also download the user-friendly app for quick transacting. However, Hanseatic Bank, winner of the Finance Award 2020, charges a 13.6% annual interest for partial debit payments and doesn't refund foreign ATM fees. Also keep in mind that the bank's main website and customer support are in German.
The Barclaycard Visa credit card offers similar benefits to the Hanseatic GenialCard. But it has different repayment plans which are interest-free for up to 59 days. You’ll need to learn some German as the banking app, website, and customer service are all in German.
If you settle your card balance partially, you’ll get charged an 18.38% annual interest rate. Payments in installments attract an individual interest rate. You can also settle the balance manually with a one-time payment and change the credit card to a direct debit card in the app. The bank doesn’t refund foreign ATM fees on withdrawals.
The DKB Visa Card has been around for longer and is possibly the most renowned charge credit card. It doesn’t attract foreign currency payment fees or worldwide cash withdrawal charges. The Visa credit card is issued free of charge but you must have a DKB cash checking account. The bank deducts the credit balance automatically from the linked account at the end of every month.
The first year you sign up, you’ll enjoy the card’s benefits free of charge. in the subsequent years, you’ll continue benefiting if you fulfill the active customer requirement. To become an active customer, you can use your checking account as a salary account or transfer one payment of €700 to the account every month.
You’ll be given a credit limit of €100 in the beginning, and this will gradually increase as you prove your creditworthiness to DKB. However, the bank charges a 6.74% overdraft interest to active members and a 7.34% interest to inactive members. If you can maintain a positive balance in your checking account, the credit interest may go down to 0.1%.
Most credit cards in Germany are completely free, but some have annual fees. The bulk of the fees comes from hidden charges, which is why you should read the fine print before getting a credit card. Verify the following costs:
The annual fees (Jahresgebühr)
The fees associated with using the credit card abroad and transacting in foreign currency (Auslands & Fremdwährungsgebühr)
Cash withdrawal fees in both Germany and abroad (Bargeldabhebungsgebühr).
Card replacement fees (Ersatzkarte / Zweitkarte)
A credit card can help you to easily make purchases in Germany and withdraw cash worldwide. But if you want to send money to or from Germany or transfer a family member some money, use Xe (that’s us).
Sure, you could use your newly acquired credit card, but the foreign transaction costs can add up. If you use a bank, then you’ll be on the hook for numerous bank fees as well as unfavorable exchange rates that can seriously reduce the final amount the recipient gets.
With Xe, you can send money from Germany to more than 130 countries. The entire process happens online (or in our mobile app), and you can make transfers any time and any day of the year. You can send money in over 98 currencies, and the sign up process is super easy. Open an account today to enjoy an easy, convenient, and cost-effective way to send money worldwide. And the best part is, you can fund the transfer directly using your newly acquired credit card.