Some of the world’s largest neobanks have emerged in Europe. The reasons for opening an account are diverse. From paying lower fees, to better currency exchange rates and even better yields. Here are the best neobanks in Europe.
Wise.
If you open the account from the European Union, a Belgian IBAN will be assigned. This neobank is famous for its low fees, especially when it comes to currency exchanges. Like most neobanks, it also provides the possibility to have several cards at the same time. Some people also use it to save in other currencies, as it is the best at this. It is one of the most internationally compatible, being compatible even in Australia.
It is quite popular among travellers, digital nomads and foreign workers, who want to send money back home. They now have more than 12 million customers. It used to be called TransferWise and some people still call it that.
Revolut.
Revolut is basically a neobank that offers you a lot of digital financial services. I’m talking about accounts in several currencies where you can make currency exchanges without commissions, debit cards that don’t charge you extra for shopping outside the country, fast and cheap transfers with the real exchange rate, options to invest in cryptocurrencies, stocks and ETF funds, security measures like two-step authentication and it’s also a spending control app, plus an account that gives you interest on money depending on the plan you choose.
They have several types of subscription, from a free option to paid options that give you extras like cash back on purchases and insurance. All of this is managed from an app on your mobile, without the need to go to a physical office. It is worth noting that Revolut already has more than 50 million users around the world.
This neobank also has a bit of a bad reputation, in that account opening is so fast that it has sometimes been used by scammers.
Trade Republic.
It is a German neobank focused on investments, offering its clients a German IBAN. It has a banking licence from the European Central Bank, with protection of up to €100,000 in case of bankruptcy. The company allows investment in the stock market and various investment funds, along with more than 50 cryptocurrencies, including Bitcoin. One of its strengths is the interest-bearing account with interest on uninvested cash, limited to €50,000, and a debit card with a 1% investment saveback.
Its investment fees are quite low, at only 1 euro per transaction, making it accessible to investors of all levels. In addition, it offers automated investment plans, facilitating long-term savings strategies. Easy to use, Trade Republic has managed to attract an 8 million customer base, as it is one of the neobanks that has invested the most in advertising, especially affiliate and influencer advertising.
Klarna.
Neobank with IBAN in Sweden. This Swedish company has made a name for itself, thanks to its flexible payment system, but now it also offers itself as a Swedish neobank. With Klarna, you can get a Swedish IBAN, which makes transfers within the Eurozone much easier, without additional costs. They also have a euro savings account with a very competitive interest rate.
Another interesting service is their no annual fee credit card, which allows you to split the payment of your purchases into four interest-free instalments, something that has appealed to many people. Although Klarna initially focused on facilitating online shopping with options such as ‘Buy now, pay later’, it has now become a neobank and I think this is a very good idea.
iCard.
A neobank of Bulgarian origin that has gained popularity for offering a wide range of financial services in one convenient application, iCard provides its users with a Bulgarian IBAN, which is useful for those looking for a neobank within the EU. Among their services you can find the typical neobank services, such as being able to make transfers or pay by card. They also have virtual cards.
One of the things I like most about iCard is that they allow you to open accounts in multiple currencies. In addition, iCard offers mobile payment options and the ability to freeze the card, to increase the security of your card.
How are they declared to the tax authorities?
With regard to neobanks offering investment products such as shares, funds or crypto-assets, as far as the returns you earn are concerned, they are normally declared in the country where you live for tax purposes.
Which neobank has the lowest fees?
I think Wise is the neobank with the lowest commissions in the list mentioned above. This may vary depending on the time of year and the offers offered by the other neobanks. However, it is very popular because of its low fees. It is also very competitive with companies such as Western Union or MoneyGram in terms of international transfer fees. In other words, it tends to be a company that seeks to lead the market thanks to its low fees.
Alternatives to the European Union.
Some people prefer to use neobanks in the United States, in Georgia or neobanks in Great Britain, because they tend to offer greater anonymity. In the European Union, there are regulations that provide greater transparency about users’ financial activities. On the one hand, what the EU is doing can be positive to avoid scams or large losses of money in case of bankruptcies, as they are regulated entities. However, other consumers prefer greater privacy.
Over time, CBDCs will provide digital wallets with greater anonymity anywhere in the world or even digital money stored in physical formats, such as pen drives or physical wallets. This is a service that is increasingly on the rise, and in the US there are already companies like Airtm that offer such a service. You can store digital money and then buy with that money in any shop.
Earn money for inviting your friends.
You can earn money by inviting your friends to register with some neobanks. The main ones that tend to offer such promotions are: Trade Republic or Wise. Most of them tend to pay similar commissions, between €10 and €20 for each friend you invite. Usually this commission is paid when they make their first deposit or verify their identity details, depending on the promotion or neobank. Sometimes these fees can go up to more than €35 per friend, but this is not the general rule.
Some set maximum limits, for example up to 20 friends to invite. However, sometimes there are no such limits and many influencers have made large sums of money, without even applying for a partner, just as an ordinary user.
What are the dangers?
Not all are advantages, the dangers are as follows:
- Account blocking: they have security mechanisms that can freeze accounts for various reasons. These mechanisms can also give errors and some people take weeks or months to be able to recover the account again. Having to send and justify a lot of information.
- Not being able to talk in person: not having a person to complain to in person is a big disadvantage. Some have good telephone support, while others are mostly chatbots.
- Not having a banking licence: even though most of them do, you have to make sure of it first. To be sure that you will not lose the money deposited in case of bankruptcy. A banking licence is not the same as an e-money licence.
- Commissions on ATM withdrawals: most of them do not have their own branded ATMs or have few partnerships, so it is not uncommon to have to pay about €3 when withdrawing money from an ATM. Not only for the neobank, but also for the ATM company itself.
My personal opinion.
I think that thanks to neobanks, it is possible to save in several currencies and travel in a more economical way. It is also interesting to know the insurances that their debit cards or online accounts have, since many times they have great advantages in case of travel or accident, which many are unaware of. It is not advisable to put all your savings in a neobank or make large movements, since account freezing is very common.
This article in spanish: https://javierfinance.com/es/mejores-neoabancos-europa/