Banking Accounts

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The Checking Account

The checking account (also known as a current account) is a payment account used in both personal and business banking.


It is understood as a chronologically managed record that includes all liabilities and claims of a financial institution resulting from its business relationship with a customer. The checking account is the account for “everyone.” If it is based on a credit balance, it is also referred to as a “basic account”.


The Account Agreement

Each bank has established procedures for opening accounts based on the legal principles of account truthfulness (§ 154 AO).

The account agreement therefore always includes the following documents:

  • Identification documents (either ID card with current address or passport with registration certificate)
  • Beneficial owner (own or third-party account)
  • FATCA (Foreign Account Tax Compliance Act, declaration for tax liability in the US)
  • Credit inquiry (e.g. Schufa, can be neglected for debit-based accounts)

Deposit insurance information

In the context of increasing compliance requirements for financial institutions, particular care must be taken when verifying the identity of customers. Legal obligations require the verification of tax-relevant and money laundering-relevant data.

Opening an account is a bilateral declaration of intent, where the customer makes the initial declaration of intent to open the account. The bank can then accept or decline the request.

An existing customer relationship can be terminated at any time by either party without stating reasons. If the bank terminates the relationship, the customer must be given proper notice. A bank-initiated termination must not occur at particularly inconvenient times (e.g., if the customer is in the hospital for an extended period).

Individual and Joint Accounts

Checking accounts can be maintained as individual accounts or joint accounts. In individual accounts, one person alone acts in their name as the account holder. With a joint account, multiple parties act jointly and severally as account holders in a shared name.

There are two main types to distinguish:

  • Either-Or Account: Each account holder can individually dispose of and grant powers of attorney.
  • Joint Account: All account holders can only dispose of or grant powers of attorney together.

Typical for joint accounts is the account for married couples or life partners. In private banking, only the either-or account is relevant, as it is usually desired that each party can individually dispose of the account.

An either-or account can be converted into a joint account at any time by any account holder. In practice, however, the bank may then issue an account termination due to the increased effort.

Benefits for the Customer and the Bank

The checking account is of particular benefit to both the bank and the customer:

Benefits for the Bank

  • Establishment of a customer relationship
  • Customer loyalty
  • Generation of deposits
  • Cross-selling opportunities
  • Earning interest and commissions
  • Getting to know the customer through transactions


Benefits for the Customer

  • Participation in (cashless) payment transactions
  • Protection against loss or theft of money
  • Starting point for additional banking products
  • Simplicity and convenience

The Call Deposit Account

The call deposit account (also known as a money market account) is an interest-bearing account that operates on a deposit basis. Unlike a checking account, it is not used for processing payment transactions but is solely for investing money. Accordingly, no payment cards are provided for the account, only account statements.

Call deposit accounts are considered demand deposits. This means that the payment can be made on demand – that is, at any time without observing notice periods. The full credit balance is thus available daily.

In addition to a call deposit account, a checking account is always maintained as a reference account to which transfers can be made exclusively. A direct withdrawal from a call deposit account at a bank counter is not possible, as the money must first be transferred to the checking account. However, if both accounts are held at the same financial institution, this detour is not associated with any waiting time.

Traditionally, call deposit accounts are subject to money market interest rates. It is not uncommon for interest rates to be variably tiered according to the credit balance. The relevant baseline is the interest rate of the 3-month Euribor, issued by the European Central Bank.