Blocked account

From CEOpedia | Management online

Blocked account has multiple meanings.

In financial markets blocked account is a type of account that has some limitations regarding to withdrawal, e.g. how often, how much, by who, to what other account. They can be used to limit transfers between countries. Sometimes banks offer better interest on such accounts. E.g. customer is able to withdraw money from savings account only once a month, but he/she gets 1% better interest rate.

Blocked account can be under foregin echange controls in the country limiting amount of currency, which can be transferred to other countries or exchanged with other currencies.

In Germany blocked accounts operates in similar way for the foreign students from outside of European Union. Foreign students must prove possession of financial resources adequate to studying and living costs. Students have to being able to pay at least 720 euro per each month of stay in Germany. What is more, they are not allowed to monthly withdraw of sum of 720 euro unless they paid more than minimum.

Blocked account sometimes might relate to Deferred Action for Childhood Arrivals (DACA), which is borrower (debtor), lender and bank providing deposit account agreement. Inspection within DACA is established when bank agree abiding directives from protected lender without a necessity of pronounced borrower agreement.

Might also relate to accounts frozen by government of United States of America due to political aspects or different reasons (such as death of the account owner). When account in USA gets blocked by government mandate (for example during the war or other dangers), any financial resources on the account will not be available without proper emission from USA Treasury[1]

How to open a blocked account in Germany

Step 1: Gathering documents

You can create such account in your home, to do so, first of all, you have to fill out an application for Saving Account or Personal Account. You can download the application from the bank official website or deliver it via the e-mail. The application is usually available in English as well. Furthermore, you will need a copy of valid passport and a confirmation of university admission.

Step 2: Having documents certified

If you already have all necessary documents, go to German consulate or Embassy of Germany in your country to get all necessary documents. Consulate or an embassy will post the documents to the bank.

Step 3: Transferring money

After delivering the documents to Germany, a bank will start creating an account. Waiting time is around one week. It may happen that you will have to discharge one time payment. After the account opening you will get an e-mail with account details (IBAN number and BIC). At the time you will have to deposite required amount via international transfer. For example, per one academic year you will have to deposite 8 640 euro - quite a large sum, so you are not forced to pay the whole sum at once. You can pay the whole sum in several installments. Your family or friends can help you in transferring money on the account.

Step 4: Withdrawing money in Germany

When you will be present in the country, you have to go to a bank brunch. Take your passport and visa. After a both documents presentation, your account will be activated. You will receive a giro card (depit card) and internet banking access details. From now you will be able to withdraw a cash and transfer financial resources from blocked account. Remember, howewer, your limit is 720 euro. The rest of financial resources will remain blocked. If you need more money, there is always possibility of higher payment.

It is quite common that foreign students are complaining, that opening of the blocked account is taking more time than usual. Beside the formal procedures causing prolongation, another reason might be a moment of application. There are moments when banks are receiving large amount of foreign students applications and are overloaded. It might cause a delay in opening of your account. Therefore, it is recommended to start the procedure as fast as you get an introduction letter. Meanwhile, you should decide which way of account opening you chose[2]

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  1. Blocked Account2018, Investopedia
  2. Blocked account: How it works2018, Sparkasse

Author: Martyna Miszczak