Bank charges in Luxembourg: how to reduce them easily

3 June 2022
bank charges luxembourg - withdrawals, transfers, bank overdraft, commission, interest

You ask yourself Which bank offers the lowest bank charges in Luxembourg? Or maybe you want to know the difference between bank charges in Luxembourg and abroad? Then you've come to the right place!

In this article, we take stock of the costs in Luxembourg and give you some tips on how to reduce them easily.

Charges on current transactions

The Luxembourg banking system can present some particularities that may be surprising when you come from another country. This is why it is very important to compare banks before deciding to open a current account in the Grand Duchy. Here is a overview of bank charges that you may be charged if you open an account in Luxembourg.

Account maintenance fees

These fees are common and are applied in all countries. It is a subscription fee that you pay each month for your bank account.

In Luxembourg, these fees vary from €3 (with a classic debit card) to around €10 per month. A Classic or Premier bank card will usually be included in your banking package. However, some banks offer these cards as an option, so you will have to pay extra.

Some online bank accounts are 100% freeIn most cases, however, they will simply offer a VPay card, which does not allow you to make purchases on the Internet. To get a credit card that allows you to do this, you will have to pay an additional fee.

Card fees (VISA, Mastercard)

A bank card allows you to pay in shops, on the Internet and to withdraw money. In addition, it offers you a whole range of insurances that cover your purchases and your travels. These insurances depend on the level (and therefore the price) of your card: it can be a Basic, Classic, Premier, Gold or Platinum card.

Some banks offer their card as an option, and charge it separately from your account maintenance fee. Other banks include the card in their monthly fee. Some banks even offer several cards in their banking package: you can have 1 debit card and 1 credit card, for example.

If you are looking for a bank in Luxembourg, this is a point to consider. Remember to include the cost of the bank card in your comparisons bank accounts.

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Fees for withdrawals from other ATMs

It is a practice unique to Luxembourg: most banks charge a fee if you withdraw money from another bank's ATM. These fees can range from from €1 to €2 per withdrawal made.

On the other hand, withdrawals from your bank's ATMs will be completely free. So if you ever need money, plan to go through your bank to avoid unnecessary charges!

Good to know: some banks include a monthly number of free withdrawals from third-party ATMs. So, if you are in need (abroad for example), you can make 1 or 2 free withdrawals per month. Consult the price brochure of the bank of your choice to find out about these conditions.

Charges for transfers to other banks' accounts

This is a particularity of Luxembourg. In France, for example, you can make unlimited SEPA transfers, regardless of the bank of the person you are sending money to.

In Luxembourg, some banks require you to pay a fee for each transfer made to an account at another bank. These fees are generally between 0.50€ and 1€ per transfer.

This is an important point to bear in mind, especially if you are a cross-border commuter and have to make regular transfers to your French, Belgian or German bank. However, the banks include a number of external transfers free of charge each month.

Overdraft fees

The bank overdraft is triggered when your account balance goes into the red. The bank then automatically gives you credit. And you are obliged to pay it back.

In the case of a bank overdraft, banks pay you two types of fees: overdraft commissions and interest on the amount owed.

Overdraft fees

This is an amount charged every time your account goes into the red, regardless of the amount of the overdraft. It is a kind of penalty triggered to make you pay for the fact that you have just opened a loan with the bank. There are two methods of charging overdraft fees:

  1. The lump sum : Some banks charge a one-off fee (e.g. £50) when you go overdrawn. This fee may seem unfair, as you will have to pay £50 even if you are only £1 or £2 overdrawn.
  2. The percentage of the amount due : As a fee, some banks charge a percentage of the amount overdrawn. This is usually 1% of the overdraft.

Not all banks charge overdraft fees. Some only charge interest. Be sure to check this point in your bank's price list.

Overdraft interest

Interest rates can be frightening: you can imagine having to pay hundreds of euros to your bank as soon as you go overdrawn. But don't worry, overdraft fees are generally limited. The fee calculation takes into account the amount of the overdraft and the number of days you are overdrawn. This is then divided by the number of days in the year.

Here is the formula for calculating your overdraft interest (or agios):

Overdraft interest = (Amount of overdraft x Number of days overdrawn x Overdraft interest rate) / Number of days in the year

If you were overdrawn by £100 for 15 days, at a rate of 9%, you would have to pay only €0.36 in fees.

Overdraft charges can become significant if your overdraft is very large (several thousand euros) and lasts a long time (several months). But in most cases, you will pay very little.

In Luxembourg, overdraft interest is generally between 7% and 9%depending on the bank. However, these rates may increase if you exceed your authorised overdraft amount. For more information, please refer to your bank's price list.

Paying less bank charges in Luxembourg

Are you paying too many bank charges and want to cut them easily? Here are all the levers you can use to reduce your bank expenses quickly:

  1. Account maintenance fees : you can easily reduce these fees. Look for a bank that offers a lower monthly fee: some accounts cost only 3 to 4€ per month and include a credit card. This can be a good solution if you are looking to reduce your costs quickly.
  2. Bank card fees Some banks charge 20€ to 60€ extra per year for a payment card. Make sure you choose an account that includes a good card (VISA Classic, VISA Premier or Mastercard Gold) in your monthly subscription. The price of cards is quite similar from one bank to another.
  3. External withdrawal fees : If you often withdraw money abroad, choose an account that offers a number of free withdrawals from third-party ATMs. This will save you about ten euros every month.
  4. External transfer fees If you often make transfers to accounts at other banks (to your spouse's account, your family's account, or to your cross-border account), then look for a bank that offers a decent volume of external transfers without fees.
  5. Overdraft fees : Are you used to being overdrawn from time to time? Then you can save money by switching banks. Some banks charge a €50 fixed fee as soon as you go overdrawn (even for an overdraft of a few euros!). The good news is that some Luxembourg banks don't charge any overdraft fees.
  6. Overdraft interest Some Luxembourg banks have quite high overdraft rates (up to 9% interest rate!). By taking care to choose the bank with the lowest rates (around 7%), you can save on your overdraft fees.

In short: be vigilant on every saving lever. Scrupulously analyse each bank's charges (withdrawals, transfers, overdrafts), and you can save a lot.

To find the bank with the cheapest bank charges, we recommend that you compare banks in Luxembourg. You will easily know which one to choose.

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bank charges luxembourg - withdrawals, transfers, bank overdraft, commission, interest

Taking advantage of tax deductions on certain banking products

In Luxembourg, you can take advantage of many banking products to lower your taxes quickly. Here are some of them:

  • The housing savings plan : This is a very interesting type of savings if you want to reduce your taxes and are planning to buy a flat or house in Luxembourg. Each year, you can deduct up to €1344 from your taxes. Also, after 3 years of saving, you can apply for a state guarantee for your home loan.
  • The pension plan : you can open a savings account for your retirement, and deduct up to €1500 each year of your taxes. This amount is increased to almost €3,200 for those over 55. The only condition is that you keep your account active until you are 60. You only have to keep it open: you are not obliged to continue paying money into it every month. However, if you decide to close it before you turn 60, you will have to pay back what you received in tax refunds.
  • A car loan or consumer credit: you will be able to deduct the interest expense from your tax return (up to a maximum of 672€ ceiling per year). Thus, by choosing a loan at an attractive rateThe cost of your credit will be greatly reduced. Be careful, however, that deductions can be added to those granted for civil liability in car and home insurance, and must not exceed the annual ceiling of €672 for a single person.

The cheapest bank in Luxembourg

There are two types of cheap banks in Luxembourg:

  1. 100% online accounts: Most of them are totally free. However, you will only have a VPay card (you will have to pay extra for a credit card). And in most cases, you won't be able to overdraw.
  2. The cheapest classic accounts: with account maintenance fees of between €3 and €5 per month, a payment card included, no overdraft commission, and a few free external withdrawals and transfers each month.

You can find the best bank of the moment by consulting this our selection of the best bank accounts Luxembourg.

How to change banks?
Our guide to changing banks in Luxembourg.
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How to change bank in Luxembourg - Switchr

Frequently Asked Questions (FAQ)

What are the bank charges in Luxembourg?

In Luxembourg, most banks charge a fee if you withdraw money from third-party ATMs. Some also charge a fee for each transfer to an account at another bank. Finally, some banks charge commissions of several tens of euros every time you are overdrawn. To avoid these fees, compare offers and find a bank that offers a number of free external withdrawals and transfers, as well as low overdraft fees.

How to stop paying bank charges?

To pay as few bank charges as possible, choose a bank that offers low account maintenance fees, unlimited external withdrawals and transfers, and no overdraft fees. The best way to find a bank that offers these options is to compare bank offers in Luxembourg.

What is the maximum amount of bank charges in Luxembourg?

There is no maximum bank fee in Luxembourg: these fees are regulated by free competition between banks, which pushes them to offer more attractive rates. On the other hand, some banks charge fees for each external withdrawal or for each transfer made to an account at another bank. To avoid this, we advise you to compare banks before choosing your bank.

Which banks do not charge bank fees?

In Luxembourg, all banks charge bank fees. However, some banks do not charge account maintenance fees and offer free online banking accounts. However, you will have to pay extra to get a standard credit card. You can find them by comparing them on this ranking of banks in Luxembourg.

How to save on bank charges?

To save on your bank charges, you can find a cheaper bank (it will cost you less each month). Your new bank should also offer unlimited withdrawals and transfers, and no overdraft fees. Finally, its overdraft interest rates should be reduced. You can easily find a bank that offers all these benefits on this online bank comparison tool.

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