Germany and electronic payments are a relationship that I have heard expats thoroughly discussing. Cash has traditionally been king for Germans, and smaller stores or restaurants rarely accepted card payments. However, my gut feeling and the numbers suggest that the financial landscape has been rapidly changing: In 2017, consumers still paid 74% of all their purchases in cash, while in 2023, it was only 51%. Hence, credit and debit cards have become increasingly popular and easier to access – whether you are an expat moving to Berlin or an international student in Munich.
German credit cards work similarly to those in other countries, allowing consumers to make purchases on credit and repay the balance later. However, notable differences exist in how they are used and perceived compared to countries like the US or the Nordics.
In my ultimate guide to credit cards in Germany, I would like to give you a thorough insight into everything you need to know – from understanding the credit card landscape, usage scenarios, the application process, associated fees to choosing the best card for your needs.
Navigate this Guide
1. Understanding German Credit Cards: How do they Work?
2. Using Credit Cards in Germany: Insights for Expats
3. Applying for Credit Cards in Germany: Is it Easy?
4. Cost and Fees of German Credit Cards: What to Watch out for?
5. Choosing Your German Credit Card: It is a Match!
Understanding German Credit Cards: How do they Work?
German credit cards (“Kreditkarte”) operate on the principle of borrowing money from a card issuer, which is then repaid either in full or in installments.
When you use a credit card, you are essentially borrowing funds up to a pre-approved credit limit (“Kreditlimit”), representing the maximum amount you can spend on the card. Unlike debit cards (“Debitkarte”), which directly deduct funds from your bank account, credit cards allow for delayed payments, offering greater financial flexibility.
Repayments typically follow a billing cycle (“Abrechnungszeitraum”) – usually monthly – during which all transactions are recorded. At the end of the cycle, the cardholder receives a balance statement (“Abrechnung”) detailing the amount owed. Depending on the card type, you can either pay off the balance in full to avoid interest charges or make a minimum payment (“Mindestrückzahlung”) to carry over the remaining balance into the next cycle, with interest (“Zinsen”) based on the annual percentage rate or APR (“Effektiver Jahreszinssatz”) applied.
Glossary: German Credit Card Terms
English
German
Explanation
Credit Limit
Kreditlimit
The maximum amount you can borrow on your credit card
Billing Cycle
Abrechnungszeitraum
The interest-free period (e.g., monthly) during which all card transactions are recorded
Balance Statement
Abrechnung
A document summarizing your spending for each billing cycle
Annual Percentage Rate (APR)
Effektiver Jahreszinssatz
The interest due on the unsettled amount after the end of the billing cycle
Minimum Payment
Mindestrückzahlung
The smallest amount to repay by the end of the billing cycle
Debit vs. Credit Cards: German Key Differences Explained
About 90% of card transactions in Germany are performed using debit cards. Nevertheless, credit cards are also widely used for different purposes.
What is a Debit Card?
Debit cards are the standard cards that come with any German current account (Girokonto). The most common types are the German girocard / EC-Karte, Visa Debit, and Mastercard Debit.
The focus is on efficient payment, as the money is immediately deducted from your account. Accruing debt is impossible; on the other hand, debit cards offer fewer perks and no credit line. Hence, they are great for ATM withdrawals or daily purchases like groceries or transportation.
What is a Credit Card?
Credit cards enable users to borrow money up to a predetermined credit limit, which is repaid later. They offer more flexibility for larger purchases or emergency spending than debit cards. Credit cards are common among business travelers, who advance travel costs and are only reimbursed with delay. Users often benefit from generous rewards or cashback programs and insurance packages.
What Are the Different Types of Credit Cards in Germany?
Frequently, I hear friends talking about requiring a “credit card, Visa, or Mastercard. However, there are three different types of credit cards with distinct differences in how they function:
Charge credit cards
From my personal experience, charge credit cards are probably the most common type of credit card in Germany when you get it together with a bank account. The total balance is deducted from your bank account once a month. This way, you cannot run into high-interest payments because of missed payments. Nevertheless, penalties are charged if the transaction fails because you have insufficient funds in your current account.
Revolving credit cards
With revolving credit cards, you do not have to pay interest until the due date (usually 30-60 days in the future). Afterward, you can decide on the amount you want to pay back. To avoid debt by accident from accrued interest on any unpaid amount, I feel it is wise to choose a German credit card provider that allows you to set up an automated direct debit for the total amount from your bank account once it is due.
Prepaid cards
You must load money onto a prepaid credit card before using it. Prepaid cards function much like debit cards, with the difference being that they are not linked to a bank account. These cards are often dedicated to people with a short or adverse credit history.
Virtual Credit Cards: A Modern and Digital Option
A virtual credit card is a digital version designed specifically for online or mobile use. It functions similarly to a traditional credit card but does not have a physical form. Instead, the card details, including the number, CVV, and expiration date, are issued digitally by a financial institution or credit card provider.
Virtual cards have become an increasingly popular alternative to traditional physical credit cards, offering flexibility and enhanced security. Typically, virtual credit cards are linked to another credit card or bank account. They can be generated on-demand for specific transactions or general online usage. As they are issued fully digitally, you will not need to wait for a physical card to be shipped. The card details are generated within a few minutes, and you can then use the card for online payments or set it up for mobile payments at retail stores using Apple Pay or Google Pay.
Innovative fintechs such as N26, Wise, or Bunq issue virtual cards especially. However, these cards are mainly comparable to debit or prepaid cards as they do not have a credit line.
Market Overview of Credit Card Companies in Germany
The three most prominent brands—Visa, Mastercard, and American Express—dominate the German market for credit cards.
Visa and Mastercard are the most widely accepted credit card brands in Germany and globally. They are known for their reliability and various credit card options: From basic cards to premium cards offering travel benefits and cashback, Visa and Mastercard cater to all user profiles.
Both brands are issued through national or international banks in Germany like Deutsche Bank, Commerzbank, or Santander. Therefore, the perks, benefits, credit limit, fees, and acceptance criteria depend on the chosen financial institution. I have compiled a list of all German banks that issue Visa and Mastercards for you here.
American Express, on the other hand, is often associated with premium services and superior rewards programs. You can only purchase your Amex card directly through them.
Frequent travelers and high-income users favor American Express for their exclusive benefits, such as travel insurance, rewards programs, and event access. Still, American Express has a more niche presence since smaller retailers less widely accept Amex cards. Most Amex holders, therefore, possess a secondary Visa or Mastercard credit card as a backup option.
Using Credit Cards in Germany: Insights for Expats
Are Germans Cautious about Credit Cards?
Cash has always been king in Germany. We Germans associate cash payments with greater control over our personal finances to avoid overspending. German culture emphasizes financial security, transparency, and a general aversion to debt. Even nowadays, some of my friends prefer walking around the city with several 50 Euro bills in their pockets than just paying by card.
Although card transactions are on the rise, people have a preference for debit cards, which allow payments only when sufficient funds are available. I do not think that any of my friends, really make use of their credit line. Most of us, use credit cards more because of associated perks and convenience:
- Digital payment trends: The rise of e-commerce, digital wallets, and contactless payments has increased the demand for credit cards in Germany.
- International travel: Germans love international travel, and the country has the number 3 outbound tourism market. Credit cards offer significant benefits regarding low-fee payments in foreign currencies and additional travel perks.
- Younger generations: German Millennials and Gen Z have a changed attitude towards financial risk and prioritize convenience.
- International influence: The growing expat population and inbound tourists with different mindsets have made credit cards more visible and accepted in German daily life.
Where is Your Credit Card Accepted in Germany?
Credit card acceptance – and acceptance of electronic payments in general – varies widely in Germany. They both depend on the type of business, location, and the specific card type. The two main reasons for this are:
- The cash-driven culture does not generate enough customer demand for electronic payments
- High commissions levied by credit card companies and terminal providers make it economically unsustainable for merchants
While some smaller retailers or marketplaces do not accept card payments, others exclusively allow debit cards, especially the German girocard. Credit card payments are usually welcome in urban areas, larger places, and online. However, there might still be restrictions regarding Amex credit cards.
To make life easier for you, I developed the following overview on card acceptance. Please note that this is a general guideline based on my personal experience, and every business owner, in the end, decides for themselves:
Overview: Credit Card Acceptance in Germany
Location
Acceptance Level
All types of credit cards are widely accepted; many hotels even require a credit card for booking guarantees and incidental holds.
Often, card payments are not possible; payments are made in cash, by bank transfer, or via booking portals (e.g., Airbnb, Booking.com).
All types of credit cards are widely accepted.
Particularly in rural areas, only cash is accepted, or sometimes German girocards are accepted if there is minimum spending.
Typically cash-only.
All types of credit cards are widely accepted.
All types of credit cards are widely accepted; car rental companies even require a credit card for incidental holds
Overall, the acceptance is increasing nationwide, and I have become pleasantly surprised about how often I can pay by card. Urban residents, tech-savvy younger generations, and internationals are leading this shift. However, I recommend always carrying some “emergency cash” with me.
Why Expats in Germany Need a Credit Card – or Not?
You will hear it often from expats and locals alike: Life in Germany is definitely possible without a credit card. The essentials for your German financials are a current account, a debit card, and cash. Nevertheless, a sound credit card can make your life easier and offer certain advantages depending on your individual situation. Here are some potential key benefits:
Online shopping: Online retailers usually charge your card before shipping any goods. In case of returns, you will get a refund once the item arrives back at the warehouse. Thanks to extended billing cycles of credit cards, you probably do not have to advance the amount for returned items, as you receive the refund before the amount is due.
Travel bookings: Many travel services accept credit cards as the primary mode of payment. Car rentals or securing hotel reservations may be impossible with a debit card. These businesses often require credit card payments to block deposits or incidentals
Emergency expenses: Credit cards provide a safety net for unexpected expenses, such as medical emergencies or urgent repairs
International use: Credit cards often have beneficial conditions for card payments and cash withdrawals abroad, mainly because of low conversion fees.
Credit history: A good credit score can influence decisions on rental agreements, loans, and other financial services. Using a credit card responsibly—making timely payments and avoiding excessive debt—can help build that credibility.
Cashback and loyalty programs: With many credit cards, you can earn a percentage of your spending back as cash or reward points for flights, hotel stays, or shopping.
Travel Insurance: Some credit cards include insurance for trip cancellations, lost luggage, or medical emergencies abroad.
Perks and memberships: Some credit cards include amenities such as airport lounge access or priority boarding, dining or travel vouchers, priority event access, and much more.
Work expenses: If you travel with your employer, you usually have to advance the amount and will only get reimbursed after the trip. Credit cards can cover the gap between payments and reimbursements.
Applying for Credit Cards in Germany: Is it Easy?
As with everything, applying for a credit card in Germany follows a structured process to ensure applicants meet the financial and legal requirements set by national banks and monetary authorities. I sunmarized this process in five steps:
Steps to Apply for a Credit Card in Germany
Challenges Expats Face When Applying for a German Credit Card
Expats often complain about declined applications when requesting a credit card. This is due to the system’s focus on credit history and consistent income. However, there are some options to overcome the challenges.
Why Expats Struggle to Get Approved for Credit Cards in Germany?
- Lack of credit history: Expats who have only recently arrived miss a credit history in Germany. Since German banks rely heavily on Schufa, the nation’s credit scoring agency, a lack of prior financial activity can significantly lower your chances of approval.
- Difficulty proving stable income: Banks often require applicants to show evidence of consistent and sufficient income, such as recent pay slips or tax records. Meeting this requirement can be particularly challenging for expats who are self-employed, on probation periods, or recently employed.
- Missing long-term residence: A formally registered residence is required, and applicants who have not moved frequently are preferred. Especially in the beginning, expats often find temporary accommodation.
- Debt: International students or recent graduates with unpaid loans, especially, may be affected by a negative credit rating.
What are the Options if Your Application gets Declined?
- Opt for expat-friendly credit card options with more flexible income requirements or dedicated student credit cards.
- Open a current account first with the bank from which you want to obtain the credit card. Banks are usually more relaxed with their existing customers, especially if the card comes with a monthly or annual fee.
- Start with alternatives like prepaid credit or debit cards that do not involve such stringent creditworthiness checks.
- Establish creditworthiness first and apply again once you have lived at your registered address, maintained a German bank account, and shown regular income for some months.
To understand all ins and outs of this process, check out our dedicated article on how to apply for a credit card in Germany.
Cost and Fees of German Credit Cards: What to Watch out for?
Using a credit card comes with some obvious and hidden costs. From my personal experience, I would advise to have a detailed look at the conditions for each credit card and then pick one that best covers your personal spending behavior to avoid unexpected expenses.
Common Credit Card Fees and How to Avoid Them
Fee or cost
What to expect?
How to avoid?
Most standard credit cards charge a yearly fee ranging from 0 to 50 Euros. Premium cards with added perks like travel insurance or cashback programs typically cost 100 Euros or more annually.
Look for no-fee or low-fee cards. Only get a premium credit card if you make enough use of the additional perks such as travel insurance or airport lounge access.
Credit card issuers often charge a 1%–3% fee for transactions in foreign currencies.
If you travel frequently or shop internationally, choose a card for expats or travelers that waives foreign transaction fees.
Typically, credit card providers charge a fee for ATM cash withdrawals, normally a percentage of the withdrawal amount but no less than 5 Euros.
You can use your debit card connected to your current account for cash withdrawals. Alternatively, there are dedicated cards that do not charge for cash withdrawals worldwide.
Missing a payment results in late fees, and carrying a balance can lead to interest charges of more than 20% annually.
Choose a credit card that allows automatic payments to ensure your bills are settled on time. Paying your balance in full each month prevents interest from accruing.
An additional card for your partner or other family members can cost 10 to 20 Euros annually.
Opt for a credit card provider that issues a secondary credit card for free or purchase a separate free credit card in the partner’s name.
“Zinsen”: Credit Card Interest Rates and APRs
Credit card interest rates can add up quickly, especially if you carry a balance. Suppose you understand the mechanics and use your card responsibly. In that case, you can avoid these costs entirely and make the best use of the advantages of your credit card.
How is interest calculated?
Credit card issuers charge interest on the remaining balance after the payment due date. The interest is typically calculated daily based on the annual percentage rate (APR) or “Effektiver Jahreszinssatz” and compounded monthly. This means the longer you carry a balance, the more interest you pay.
What is the long-term rate?
Some credit cards offer an introductory interest-free period or “immediate cash.” However, this offer is only valid for the first few months, and after this period, the APR reverts to the standard rate, which can range from 10 to 20% or more.
- Pay your balance in full each month before the due date: Most credit cards in Germany provide a grace period, during which no interest is charged on new purchases. Take advantage of this period to keep your costs down.
- Choose a card with an extended grace period: If you need to frequently advance from your own pockets – i.e., for business travel – look for credit cards that include an extended billing cycle. The most prolonged grace periods in Germany are usually between 60 and 90 days.
Choosing Your German Credit Card: It is a Match!
I have seen how German credit cards have become increasingly widespread, valuable, and versatile over the years. Whether you are looking for cashback, low fees, or premium perks, there is a card out there that can suit everyone’s lifestyle.
Choosing the right credit card is about understanding your needs and comparing available options. That is why I have put together a guide on the Best Credit Cards in Germany with tips, reviews, and recommendations to help you make a conscious choice. In the end, it comes down to six differentiating factors to consider when choosing a credit card:
Factors to Consider When Choosing a Credit Card
What will it cost you?
Try to reduce the regular fees – e.g., annual base charges, the cost for partner cards – and usage fees like ATM withdrawals or foreign transaction fees.
What are the credit terms?
If you want to use your credit card to increase liquidity, you might opt for a revolving credit card with extended billing cycles and low interest rates.
What do you gain?
Look out for valuable perks that add value to your life – such as cashback, miles, discounts, insurance, or airport lounge access.
Can you use it flexibly?
While American Express offers attractive benefits, it is more suitable as a second credit card since only Visa and Mastercard are generally accepted.
Is it convenient for you?
Understand which factors are important to you, such as multilingual support, a user-friendly mobile app, or in-person branch support.
Do you fulfill the requirements?
Newcomers without extensive credit history or steady income should check for banks and cards having less rigid application requirements.
German Credit Cards for Different Target Groups and Purposes
The German credit card market offers various options tailored to different users, whether you are looking for rewards for daily purchases, travel perks, or a straightforward card with no fees. The following categories of credit cards exist:
Free credit cards
without annual fees are the budget-friendly choice for occasional use.
Student credit cards
without basic fees are accessible to students with no regular income.
Travel credit cards
are famous amongst frequent travelers for their zero foreign transaction fees, travel insurance, and rewards on flight bookings.
Credit cards with simpler credit checks
are a good option for new expats in the country.
Rewards and cashback credit cards
help people save money while spending. They reward you with a percentage of your purchases or offer points redeemable for discounts or products. They are often issued as gold or metal versions with high credit limits or as airline travel credit cards to collect miles.
Online or virtual credit cards
can be issued within minutes for online shopping and mobile payments.
Joint credit cards
offering benefits to all cardholders are perfect for couples or families managing shared expenses.
Credit Card Reviews: Insights into Individual Card Options
Once I figured out which category of credit card suits me, I like to dive deeper into different options and providers. Choosing the best credit card usually comes down to understanding the details of specific offerings. Reviews are essential for you to compare features, benefits, and potential drawbacks. They give you real-world insights into how a card performs and whether it meets your needs.
I have reviewed some of Germany’s most popular credit cards, such as the TF Bank Mastercard Gold, all Commerzbank credit cards, comdirect’s Visa Credit Card, and the DKB credit card. You can explore the entire collection of Settle in Germany’s in-depth credit card reviews here.
Ready to explore your options?
The Best Credit Cards in Germany page is packed with detailed reviews, comparisons, and practical tips to help you find the perfect card.
Conclusion
Credit cards in Germany work pretty similar to what you should be used to from any other country. It is more the local mindset to electronic payments and debt that is different. However, these customs have been rapidly changing.
From my own experience, getting a credit card in Germany can open opportunities if you understand the local practices and manage your finances wisely. Before signing up, I recommend you reflect on the right card according to your needs and situation to pass credit checks, pay only a few fees while traveling abroad, or obtain the best grace periods for repayments.
Check our detailed comparisons and reviews to find your best German credit card here.
