Switching bank accounts
How to use the bank switching service and important points to remember.
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Finding a new bank account that better meets your needs is great. But what about your existing bank account? In this guide, we’ll explain how you can easily switch your bank account in Germany.
What is the bank account switching service?
In Germany, banks are required to cooperate with each other to help customers switch accounts. This is thanks to a 2016 law which made switching services (Kontowechselservice) a required service. When you switch banks, your current bank will send your transaction history to your bank and will also organise your direct debits to be changed.
How does the bank account switching service work?
There are a few steps involved using the bank account switching service.
When you open a new bank account (online or in a branch) you’ll need to provide details of your existing bank account. If you’re applying in a branch, you’ll fill out a physical form. If you’re opening an account online, just select the bank switching option and provide your details there.
Your new bank will request certain information from your old bank within two days. This includes a list of your existing standing orders and your transactions for the past 13 months.
Your old bank will send those details to your new bank and yourself within five business days. You need to tell them which transactions you want to be transferred to your new bank. as well as specify a date at which they should stop accepting incoming transfers, taking direct debits and executing standing orders. They will transfer the remaining balance of your account to your new bank on the date you choose and then close your account.
Your old bank will get in contact with any companies affected by your account switch. This includes any standing orders you have set up.
Every company involved in the switch needs to confirm it in writing. Your standing orders and direct debits will be changed on the date you specified and your account will be closed.
What should you remember when using the switching service
There are a few points to keep in mind when you switch banks using the service.
- You need to open your new bank account before you can switch
- There is a promise that switching your account using this method will take ten minutes, but it often takes longer.
- You are responsible for identifying important direct debits (Lastschriften) and saved payments (Überweisungsvorlagen), so make sure you take time to find all important transactions that need to be switched.
- You need to provide contact information for any companies your old bank needs to get in touch with.
- Some online service providers, such as PayPal and eBay, require you to manually change your bank account information on their websites.
- There are reports that regular standing orders (Daueraufträge) are not easy to transfer using the bank switching service. You may decide to change these manually.
What should you consider before changing bank accounts?
Here are some factors you may wish to consider before making the switch.
- Introductory perks. Once you switch to a new provider, you may be eligible for new customer perks including preferential interest rates and cashback on bills paid. Are these perks worth the switch, or do you already enjoy huge deals with your current provider? Additionally, these privileges are enjoyed by first-time customers. This means you may not be eligible if you switch to a provider who you already hold with an account with, or used to hold an account with.
- Early closure fee on your existing bank account. Some banks in Germany impose early closure fees when accounts are closed before a stipulated time period has passed. This cost typically amounts to small pinch in your wallet but could influence the timing at which you’d choose to switch bank accounts.
- Fees and interest rate of your new account. What are the fees associated with your new account and the interest rate offered? Do they rival the terms offered by your existing account?
- Eligibility. Are you eligible for the new account you’ve got your eye on? In some cases, you may be eligible for basic account opening but not for the full interest rates and benefits as advertised by the bank. This happens most often with bank accounts offering tiered interest rates.
- Non-monetary considerations with your new bank. Besides interest rates and fees, there are plenty of things to consider with a new bank. How accessible are their ATMs? What is the quality of customer service offered? Is mobile banking available? Draw up a list of questions and see if your new provider meets your desired criteria.
- Licensing. If you’re considering switching to a digital bank, you should check how it is licenced. Not all digital banks are “banks”. Without a banking licence, these providers cannot offer standard bank accounts and funds you deposit with them aren’t protected by the government guarantee.