Germans and cash

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Update: This was very relevant before Corona, but the pandemic has really changed the German attitude and now cashless payments (with credit cards but also Apple Pay, Google Pay etc.) are much more common.

Germany is very much a cash-based economy. If it can be paid in cash, Germans will almost always prefer it this way. Recent researches have shown that in terms of value (turnover), more than 50% of payments are done in cash, which is much higher than in other developed countries. In terms of transactions, more than 80% of payments are settled in cash! This too is very different than elsewhere (interestingly, though not surprisingly, there's one exception: Austrians are just as obsessed with cash as Germans).Since the financial infrastructure in Germany is the same as anywhere else in the West, it must have something to do with the German psyche, although nobody knows what it is, exactly, that makes Germans settle almost everything on the spot. There's one explanation to this phenomenon that I particularly like - it's quite speculative, but applies to both Germany and Austria: The German word for "debt" is the same as for "guilt". By owing somebody something, you are basically guilty of something. By postponing a payment, you become guilty. And nobody likes to feel guilty, right?Whatever the reason might be, credit cards are quite rare in Germany - not just among customers, but also in businesses. Kiosks, groceries, pharmacies, delis and supermarkets, several fast food chains, many shops and even department stores (specifically those aiming at locals rather than tourists) usually don't accept credit cards. Taxis that have the equipment for accepting credit cards are officially considered in Berlin as "Premium Service". The ticket machines of the public transportation system, which you will probably use, have a slot for cards - but that's meant for German debit cards and nothing else.

In fact, most Germans don't even have a credit card, because they do all kinds of transactions, both online and in “real-life", with their German debit cards. It is very much a cash society that doesn't like to live on credit - which, in itself, is also very German in character, as they can only spend what they've earned (and spending more than one has, i.e. spending too much, creates "guilt"!).

Some department stores, international chains, as well as specifically tourist-oriented restaurants and shops will usually accept credit cards, although some of these businesses charge an extra fee of 2-4% if you choose to pay with your credit card (to cover the commission).

That said, it's still important to have your bank/debit/credit card in Germany, because it's the best way to get cash - much better than bringing USD in cash to Germany. Since the shift to the Euro, currency exchanges have become quite rare - the few in business have have increased their profit margin significantly. The buy/sell spread is about 10%, i.e. 5% above and below the official rate (probably because they actually employ real people). For you however, it's much better to use the ATMs that can be found all over the city. You will be given a much better exchange rate, perhaps even the official one. Depending on your bank, you might also be charged a commission, but it will still be a relatively small fee compared to the profit margin of the exchange offices.

The bottom line is therefore: Even though you often can't pay with your credit card, you should still bring it to Germany, so you can withdraw cash whenever you need it. Since you probably don't use ATMs so often at home, there are several things you should check with your bank in advance to make sure you can use your card abroad:

1. Is your card "open" for withdrawals abroad?

2. Does the card have a daily usage limit and if so, is it sufficient? Please note that your limit in foreign countries might be different from what you're used to. Even if your card doesn't have a daily limit at home, it could have such a limit for withdrawals abroad.

3. Do you have your card's secret code / PIN (Personal Identification Number)? You will not be able to use any ATM without it.

4. Are you sure you have the right PIN? At home, you probably just give your signature and rarely use the PIN - it's best to actually try it before going abroad. Your bank will never give you a new PIN on the phone, regardless of how badly you might need it. So just in case you think you know the right PIN but actually don't, it's best to find this out before your vacation.

5. Do you have another card as a backup? It's best to travel with more than one, so you always have a "Plan B". Just make sure to keep them at different places (i.e. not in the same wallet).

6. Is your bank / card issuer affiliated with a German bank? If so, you will probably not be charged a commission when using an affiliated ATM. Many foreign banks are affiliated with Deutsche Bank, but it's best to ask your bank at home.

We hope this helps you in your planning. If you have any questions, feel free to contact us!