Compare best demand & savings accounts in Germany in December 2024

What is a savings and demand accounts

A savings account is usually used for short or medium-term savings, where you deposit money and earn interest over time. These accounts often have restrictions on withdrawals and can offer higher interest rates than demand deposit accounts, but lower rates than fixed-term deposits.

However, this is justified by higher volatility than with fixed-term deposits. 

A demand deposit account offers flexibility and competitive interest rates. 

With a demand deposit account, you can typically open an account with as little as €1 and deposit funds at any time. You also have the freedom to withdraw money whenever you need it, making it a convenient option for managing day-to-day expenses and transactions.

Savings accounts & demand deposits in the EU are insured up to 100,000 € by the Deposit Guarantee Scheme (DGS) in one bank or credit union per owner. 

Why open a savings or demand account

A high interest deposit account is a good way of storing money for the future, separate from day-to-day spending, because of its security, liquidity and potential to earn interest. These savings accounts are a great place for your emergency fund or to save for short-term goals such as holidays or home improvements.

As well as giving you quick access to your money, a high yield savings account offers relatively attractive bank interest rates. These are still lower than fixed-term deposits, but this type of deposit is more practical and convenient because your investment is not frozen for the whole term of the deposit.

Instead, you can keep adding to your demand deposit account, increasing your returns through compound interest, and at the end of the term you can reinvest your savings in another deposit or keep your current deposit.

How savings & demand accounts work

You open a best savings account with a bank, neobank or credit union, online or in person. You provide the bank or credit union with personal information and then deposit an initial amount of money into the account.

Once you have made the deposit, the money in your savings account starts to earn interest. The amount you earn depends on several factors, including your bank's APY, the amount you deposit and how long you leave the money in your account.

Depending on what is available in the marketplace for savings and demand deposit accounts, you can also choose whether the money in the account is available, whether compound interest is calculated on savings, whether the deposit can be renewed, etc.

When choosing a deposit, look at how you want to receive compound interest: daily, monthly, quarterly or annually. 

At the end of each interest period, the accumulated interest on your savings will be credited to your account. Your new balance will then start earning income.

An example

Let's say you open a savings account for €30,000 with an interest rate of 3.50, where your bank pays interest annually and the deposit can be renewed. 

So if you do not withdraw any money from this account, you will earn €1,050 in 1 year. Then your new balance (€30,000 + €1,050 = €31,050) will start earning more. 

But it is important to remember that the APY on your savings account can be changed by the banks at any time, either up or down. 

Savings accounts allow you to withdraw money from your account, but many banks restrict the amount and timing of withdrawals. It is best to check with your bank when you open a savings account.

Advantages of Savings & Demand Accounts

Security: Savings accounts are a relatively safe investment option as they are insured by the Deposit Guarantee Scheme for up to €100,000 per depositor per bank.

Liquidity: Depositors can easily access their funds and carry out transactions within established rules, ensuring high liquidity.
However, savings accounts have restrictions on the number of withdrawals, conditions and amounts. It is best to clarify this information when opening a savings account. 

Demand accounts, on the other hand, allow you to withdraw and replenish funds at any time.

Management flexibility: The ability to deposit or withdraw money, extend the term of the deposit or change the type of deposit at maturity makes savings and demand deposit accounts flexible for financial management.

EU accessibility: Citizens of EU countries have access to offers from across the EU, allowing them to choose the best savings and demand account rates.

Ease of opening: Opening a savings account is easy and can be done both in traditional banks and online, from the comfort of your own home.

Organisation: Keeping your savings in an account separate from your spending money makes it easier to track your savings progress, curb overspending and get a better overview of your overall finances.

Simplified choice of offers: PickTheBank makes it quick and easy to find, compare and open savings and current accounts in your location.

Disadvantages of a Savings & Demand Accounts

Relatively low returns: Interest rates on savings and demand deposit accounts may be lower than other financial products, although other investments may involve more risk or less volatility.

For example, you can open fixed-term deposits, which offer higher interest rates, but the funds in this type of deposit are locked in until the end of the term. 

Compare and choose the best fixed-term deposits

Inflation losses: If your savings account returns less than the rate of inflation, you will lose purchasing power over time.

Limited access to funds: Savings accounts may have restrictions on the number of withdrawals or minimum transaction amounts.

Where to Find and Choose a Savings and Demand Accounts

Finding and choosing the account with the best deposit rates is easy with PickTheBank.

We analyse all banks with the best rates, credit unions and challenger banks, known as neobanks, that offer deposits to EU citizens.

On PickTheBank website you can compare and choose the best offer and then open a savings account online with the best rates.

To open a high interest savings and demand deposit account with PickTheBank, select your country of residence and proceed to the search. 

The best savings account offers from across the EU will be available to you. 

Choosing the best offer is a responsible thing to do. As well as the best savings rate, look at the country of the bank, how often interest is calculated, whether the deposit can be renewed and whether compound interest is available.

Once you have chosen a savings or demand deposit account, you are ready to open it.

Important things

Explore Banks in Other EU Countries: Consider online banks and non-banks as they tend to offer better returns. Banks in other EU countries may also offer more attractive terms and top savings rates for residents of your country.

Harness the Power of Compound Interest: Savings accounts offer liquidity, but your money grows faster the less you touch it. Use a compound interest calculator to see how small deposits accumulate over time.

Be Mindful of Taxes: Some savings accounts may offer attractive highest deposit rates, but the tax regime of the bank's country may affect the overall attractiveness. Check the tax implications before making a final decision.

PickTheBank allows you to quickly and easily find savings accounts available in your country, compare offers and proceed with the account opening process.

How to Open a Savings or Demand Deposit Account

Opening a savings account is simple!

Once you have found the most suitable savings account for you, click on the «Open online» button, which will take you to our partner's website to open the account directly. 

Depending on the bank, or neobank, the procedure is not very different, but the main thing is that you need to enter your details: your identity details, your home address and contact details. 

As soon as the account opening is approved, you can deposit the desired amount into your savings account and start earning interest!

Alternative Bank Investments

There are various alternatives to savings accounts, such as shares, bonds, fixed term deposits and more. Some of them carry higher risks but offer greater rewards, while others are less risky.

Let's focus on a comparison between savings accounts and fixed-term deposits. Both are low-risk investments.

Both savings accounts and fixed-term deposits are covered by the Deposit Guarantee Scheme up to €100,000 per depositor per bank.

Fixed-term deposits hold your money for a specific period. In exchange, they pay a guaranteed yield that’s generally higher than savings accounts. 

The trade-off for the higher yield is that there is no liquidity for an agreed-upon period of time, which can range from a few months to years. You’ll have to keep your money locked away for the term. If you withdraw cash early, you can get hit with a penalty that can eat up all of your interest earned and some of your principal.

FAQ

How are savings & demand accounts taxed in the EU?

The amount of tax depends on your country of residence and the country of the bank, credit union or non-bank. 

Some EU countries allow you to avoid taxation altogether. 

Please check this information when you open a savings or demand account.

How much should you keep in savings or demand accounts?

The amount you should keep in a savings account depends on your savings goals. If you're using it as an emergency fund, most financial advisers suggest you keep three to six months of living expenses in your account.

If you’re saving for a specific goal — like a vacation, buying a house or a car — you'd keep enough in the account to pay for that expense.

Can you lose money in a demand or savings account?

You will never lose the money you save - up to the Deposit Guarantee Scheme (DGS) insurance limit of €100,000 per account holder at any single bank, neobank or credit union based in the EU. 

Are savings & demand accounts that can be opened online secure?

Opened online demand and savings accounts are just as safe as demand and savings accounts opened at traditional institutions.

The main advantage of using an online bank is that they can usually offer higher returns with minimal fees as their overheads are much lower than bricks and mortar banks.