The 51-year-old finder alerted police after stumbling upon the bag near the centre of the western city of Krefeld shortly before midnight on Christmas Eve.
Officers were able to quickly identify the owner and reunite him with the backpack and its precious contents.
The man who found the bag “refused a finder's fee, because it was Christmas,” Krefeld police wrote on Facebook.
“There really are people who do good deeds over Christmas,” they added.
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In Germany, anyone who returns a found object is entitled to a finder's fee based on the value of the item.
In this case, the finder would have been €490 richer if he had accepted the reward.
The police's Facebook post sharing the feelgood story attracted over a 1,000 likes and nearly 180 comments, although some expressed surprise that anyone would walk around with so much cash.
A Krefeld police spokesman told AFP Thursday that while it was “unusual”, the backpack's owner had said “he felt safer” carrying his money on him.
A country of cash carriers
Although things are changing slowly as card payments become more popular, Germany is known for its Bargeld (cash) culture, and it's not unusual to pay for expensive items with cash.
In fact, hardly any other nation likes paying with banknotes as much as the Germans do.
According to Barkow Consulting, only about every 20th payment in Germany is processed by credit card. Statistically speaking, founder Peter Barkow said each German citizen keeps €2,200 cash at home.
Germans carried an average of €103 in their wallets in 2016, a study by the European Central Bank revealed, compared with an average of only €65 in the Eurozone.