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🏦 BankingTagesgeld vs Festgeld: Where Should You Put Your Savings in Germany?
2025-09-07
Discover the difference between Tagesgeld and Festgeld in Germany, and learn exactly where to put your savings to earn the best interest rates.
Moving to Germany and finally building up some savings is a real milestone — but leaving that money sitting in a Girokonto (current account) earning zero interest is one of the most common financial mistakes newcomers make. Germany has two straightforward savings products that most banks offer: Tagesgeld (overnight/call money) and Festgeld (fixed-term deposit). Understanding the difference between the two can mean earning hundreds of euros more per year on the same amount of money. This guide breaks both options down clearly so you can decide where your savings belong.
What Is Tagesgeld and How Does It Work?
Tagesgeld literally means "day money." It is a savings account where your money earns interest daily and you can withdraw it at any time — usually within one to two business days. There is no fixed term, no penalty for withdrawing, and no minimum holding period.
Key features of Tagesgeld
- Flexible access: You can move money in or out whenever you want.
- Variable interest rate: The bank can raise or lower the rate at any time.
- Deposit protection: Up to €100,000 is protected under EU deposit guarantee schemes.
- No fees: In almost all cases, Tagesgeld accounts are completely free to open and maintain.
Real example: In mid-2024, ING Germany offered a Tagesgeld rate of around 3.75% per year for new customers for the first four months, after which it dropped to roughly 2.50%. On €10,000, that earns you about €250 in the first year — compared to €0 in a standard Girokonto.
Popular Tagesgeld providers in Germany include ING (ing.de), DKB (dkb.de), Comdirect, Consorsbank, and Trade Republic — the latter offering up to 4% in 2024 on uninvested cash balances.
What Is Festgeld and How Does It Work?
Festgeld is a fixed-term deposit. You lock your money away for a set period — anywhere from one month to five years or more — and in exchange the bank gives you a guaranteed, fixed interest rate for the entire term. You cannot access the money before the term ends without paying a penalty (and some banks simply refuse early withdrawal altogether).
Key features of Festgeld
- Fixed interest rate: Your rate is locked in from day one and does not change.
- Fixed term: Common options are 3 months, 6 months, 12 months, 24 months, or 36 months.
- No early access: You must wait until the term ends to get your money back.
- Deposit protection: Same €100,000 EU guarantee applies.
- Slightly higher rates: Because you commit your money, banks usually reward you with better rates than Tagesgeld.
Real example: In mid-2024, Renault Bank direct! (a French bank operating legally in Germany) offered a 12-month Festgeld rate of around 3.90% per year. On €15,000, that is €585 in guaranteed interest — paid out when the term ends.
Reputable Festgeld providers available to German residents include Weltsparen (raisin.de), Renault Bank direct!, Opel Bank, Consorsbank, and C24 Bank.
Tagesgeld vs Festgeld: A Side-by-Side Comparison
| Feature | Tagesgeld | Festgeld | |---|---|---| | Access to money | Any time (1–2 days) | Only at term end | | Interest rate type | Variable | Fixed | | Typical rate (2024) | 2.5% – 4.0% | 3.5% – 4.2% | | Minimum deposit | Often €1 | Often €500 – €2,500 | | Risk of rate drop | Yes | No | | Best for | Emergency fund, short-term savings | Money you won't need for months or years |
Which Option Is Right for You as a Newcomer to Germany?
The honest answer is: most people in Germany should use both, not one or the other. Here is a simple framework:
Use Tagesgeld for your emergency fund
Financial advisors generally recommend keeping three to six months of living expenses liquid. If your monthly expenses in Germany are around €1,500, that means holding €4,500 to €9,000 where you can reach it fast. Tagesgeld is perfect here because you earn interest but can withdraw within 48 hours if your car breaks down or you need to pay an unexpected deposit.
Use Festgeld for savings you won't touch
If you have money you know you will not need for at least six to twelve months — maybe you are saving for a trip back to Morocco, a car purchase, or simply building long-term wealth — then locking it into Festgeld gives you a better guaranteed return. You eliminate the risk of rates dropping mid-year.
Practical split example
Imagine you have €20,000 saved:
- €7,000 in Tagesgeld (ING, 2.75%) → earns roughly €193/year, fully accessible.
- €13,000 in 12-month Festgeld (Weltsparen, 3.85%) → earns roughly €501/year, locked for 12 months.
- Total interest earned: ~€694/year — versus €0 in a Girokonto.
How to Open a Tagesgeld or Festgeld Account in Germany
The process is simpler than most people expect, and many banks are entirely online.
Documents you typically need
- Valid passport or German residence permit (Aufenthaltstitel)
- German tax identification number (Steuer-ID) — sent to you by post within a few weeks of registering your address
- German IBAN (your Girokonto number to link the savings account)
- Proof of German address (Anmeldebestätigung)
Step-by-step process
- Compare rates on platforms like Weltsparen (raisin.de), Biallo.de, or Verivox.de — all free comparison tools.
- Choose a bank based on rate, term, and minimum deposit.
- Apply online — most applications take 10–20 minutes.
- Verify your identity via VideoIdent (a video call through an app) or PostIdent (visit a Deutsche Post branch with your ID).
- Transfer your money from your Girokonto.
- Start earning interest — Tagesgeld starts immediately; Festgeld starts on the value date.
Note: Non-EU banks operating in Germany (such as those on Weltsparen) must still comply with EU deposit guarantee rules, and your deposits up to €100,000 are covered.
Tax on Interest Income in Germany
Yes, you pay tax on interest earned in Germany — but only above a certain threshold.
- The Sparerpauschbetrag (saver's tax allowance) is €1,000 per person per year (€2,000 for couples filing jointly) as of 2023.
- Interest below this threshold is tax-free.
- Above the threshold, a flat Abgeltungsteuer of 25% (plus solidarity surcharge) applies.
- To avoid automatic tax deduction, submit a Freistellungsauftrag (exemption order) to your bank — you can do this online with most banks at account opening.
For most newcomers earning modest interest, the €1,000 allowance means you pay zero tax on savings interest.
What People Get Wrong About Tagesgeld and Festgeld
1. Leaving savings in a Girokonto forever. Many newcomers simply never set up a separate savings account. Even at 2.5% interest, €10,000 earns €250 per year. That is money you are giving away by doing nothing.
2. Chasing the highest Tagesgeld introductory rate. Some banks advertise 4% or even 5% for "new customers" — but only for the first 3–4 months. After that, the rate can drop significantly. Always check what the standard rate is after the promotional period.
3. Locking everything into Festgeld with no emergency fund. If you put all your savings into a 24-month Festgeld and then face an unexpected expense, you either pay a penalty to break the term or take out an expensive loan. Always keep some money in Tagesgeld first.
4. Ignoring foreign banks on Weltsparen. Many people only look at German household names like Deutsche Bank or Sparkasse. Their savings rates are often much lower. Lithuanian, French, and Portuguese banks operating through Weltsparen often offer the best EU-protected rates in Germany.
5. Forgetting to file the Freistellungsauftrag. Without this form, your bank automatically deducts 25% tax on all interest earned — even if your total is below the €1,000 allowance. You can claim it back in your annual tax return, but it is much easier to file the exemption order upfront.
Conclusion
Germany gives you solid, low-risk tools to grow your savings — you just have to actually use them. A Tagesgeld account covers your emergency fund and keeps your money flexible, while Festgeld rewards you with a locked-in rate for money you can set aside for longer. Together, they are a simple and effective savings strategy for anyone building a new life in Germany.
If you are still in the early stages of your move — working on your CV, language skills, or visa documents — book a consultation with our German immigration specialist (€16) to plan your move. Getting the financial basics right from the start means more security and less stress as you settle in.
