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Everybody will agree with me that paying 1.5% of fees, or more, on each transaction abroad really sucks! That is not something you want to think about when you are on vacation or shopping online in other countries. Thanks to N26, this should never be necessary anymore!
N26 is a digital bank offering transfers in other currencies for free! Not only that, but the entire bank account is actually free! And they are a bank! Your money is insured according to European laws. You can even withdraw money for free several times a month! That sounds great, right?
In this post, I am going to cover everything you need to know about N26. And since I have already talked about Revolut on this blog, I will compare both services which are similar but not totally equivalent!
Stay tuned to find out how to save money on foreign exchange fees!
N26 is a digital bank, that was founded in Germany in 2016. For a short period of time, it was called Number 26. Its headquarters are in Berlin in Germany.
They first started as a simple interface in front of another bank. But they soon got a German Banking License. De facto, they are now a bank in all of Europe. They got a Full Banking License. They have the same rights as any other bank in Europe.
Since N26 is a digital bank, you will have to access it through your phone or your computer. They do not have bank offices where you can do transactions. This is the main reason they are able to cut the costs down.
You can receive payments into your account directly using your personal EUR IBAN. You can make your payments as well from your account. Also, if you know people using N26, you can directly send them money!
With your account, you will also receive a Mastercard Debit Card. You will be able to use it to make payments in foreign currencies for free as well! And you can also use it to make withdrawals in EUR for free.
Now, with this Mastercard lies the biggest caveat of N26. They do not offer any cashback on transactions!
While this card is absolutely perfect for payments in foreign currencies, you should not use it for payments in your home currency. This means you should still have a credit card with some cashback next to this one. This should be part of your credit card strategy.
The most interesting thing about N26 is its very low fees! But, first of all, we have to talk about the three different accounts that are available:
- N26: This is the standard account for most users. It is entirely free! You get some free withdrawals in EUR and all currency conversions for free!
- N26 Black: This option is on top of N26 standard and comes at a price of 9.90 EUR per month. You will get free withdrawals abroad as well which is great! On top of the base features, you will also get protection from Allianz Insurance when you travel.
- N26 Metal: This is the high-end option, for 16.90 EUR per month. You will get all the advantages of Black, plus dedicated customer support and exclusive partner offers. For instance, you can get 10% on some hotels.
Personally, the only service I am interested in would be the basic free option. For me, 9.90 EUR per month for a bank account is already too much. I do not really see the point of the Black and Metal cards. So, we are going to discuss the fees for the standard account here.
N26 also has a business plan. But this is not something that we should be concerned about. This is a plan for self-employed people and freelancers.
You can make five free withdrawals in euros per month. After that, you will have to pay 2 EUR for each extra withdrawal. You can also withdraw euros abroad for free. However, if you withdraw cash in other currencies, you will pay a 1.7% fee!
On the other hand, payments in other currencies than EUR are free! If you transfer money from EUR to GBP, you will not pay any fee. And the current exchange rate will be used. This is really great and for me, this is the main reason I would use N26.
N26 in Switzerland
Let’s start with the bad news. Unfortunately, N26 is not yet available in Switzerland. It is currently available in 22 countries but not here!
However, there is yet hope for us! In March 2019, they announced that they had plans to make it available to Swiss customers. Unfortunately, they did not set a date for that yet. But it will be great for it to be available in our country!
At first, we are probably not going to have personal CH IBAN on N26. This means we are unlikely to use it as a full bank account. However, we will have personal EUR IBAN and we will be able to make foreign transactions for free which is already great enough!
Once, and if, they had personal CH IBAN to the pack for Swiss people, I could see using N26 as my bank account. I am not sure I would change my bank account but it is an interesting option. For now, my current bank account is free. But who knows how long it will remain free!
N26 vs Revolut
The biggest differences between these two services stem from the fact that N26 is fully a bank. On the other hand, Revolut is not yet a bank.
In 2019, Revolut got a European Specialized Bank License. However, they did not yet implement anything with that. Moreover, N26 got a Full Banking License while Revolut only got a Specialized Banking License. The difference is that Revolut cannot offer any investment services to its customers. On the other hand, N26 is free to do so. N26 got a banking license from Germany and Revolut from Lithuania.
One great thing about N26 is that your money is insured according to German law. If N26 goes bankrupt, the government ensures 100’000 euros. On the contrary, there is currently no such guarantee for your money on Revolut! Once Revolut becomes a bank, money on Revolut would also be insured under the same conditions.
Also, the fees system of N26 is much simpler than Revolut. Everything is free! With Revolut, some currencies have higher fees. And during the weekend, fees are higher as well. This is a bit complicated to keep track of.
A small advantage of N26 is that they will deliver your card to you for free. With Revolut, you will have to pay 6 EUR for that service. Another small advantage is that they offer web and mobile applications while Revolut only has a mobile application.
A small advantage of Revolut is that you are allowed to withdraw 200 EUR for free abroad. This is not much but this can help. N26 will charge you 1.7% for this. After the first 200 EUR free, you will have to pay 2% at Revolut. So it is a bit more expensive than N26.
The biggest advantage of Revolut over N26 is that they already are available in Switzerland. In fact, Revolut is quite better in its accessibility, supporting many more countries. But new countries have been announced for N26. So we will have to wait and see!
There has been quite some controversy about N26 over the years.
In 2016, there has been a lot of talk about N26. First, many accounts have been terminated and some customers could not do anything about that. Apparently, the reason was that they were making too many withdrawals. Since that point, the company changed its policy on ATM withdrawals. They added the maximum of five free ATM withdrawals at this time.
Later that same year, researches found several vulnerabilities issues within N26. An attacker could use these vulnerabilities to access accounts from the users. Since that time, they all have been fixed and apparently no account has been compromised.
But there was some also more recent controversy about N26. In 2019, many users had issues contacting the bank after their credentials were stolen! It took up to two weeks for certain people to get back access to their accounts.
And in April 2019, German Bank Regulators ordered them to make changes to its process to avoid money laundering. Apparently, they did not make enough effort for that before. And they have been too slow to close money laundering accounts. Since then, they have acknowledged this and apparently started to take action.
I think every banking startup has seen some controversy since its inception. Personally, I would not worry about it too much unless I was storing a lot of money on the account. I never had more than 1000 EUR on my Revolut account and I would not want to store more than 1000 EUR on N26 either at this time.
Overall, I think that N26 is a really great product! It can save you a ton of money on foreign exchange transactions. This is not only for when you are traveling but also when you are buying things online in other currencies. Compared to most standard banks that charge from 1.5% to 2.5% fees on these transactions.
And it does not only provide a great travel card, but it also provides a great free bank account. It is an official bank and your money will be insured for up to 100’000 EUR!
Now, while it is a great bank account and travel card, you should not use its credit card too much in your own currency. You should opt for a credit card that gives you some cash back! If you do not where to start, read about my credit card strategy.
Overall, I think that N26 is better than Revolut. I am especially impressed by the fees. For instance, there is no such thing as weekend fees. And there is no limit after which foreign transactions are not free anymore. It is much simpler. I have not yet compared their mobile applications. But for my little usage, I do not think it matters much.
Once N26 comes to Switzerland, I will definitely order a card and evaluate it. If everything goes well, I may well switch from Revolut to N26. But first, I will have to wait for it to be available in Switzerland!
What about you? What do you think of N26? Are you waiting for its arrival?