Neon Bank: Free Swiss Digital Bank

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Neon Bank Free Swiss Digital Bank

Neon is one of the newest Swiss Digital Banks! It offers an entirely free bank account. Having a free bank is very important if you want to save money for managing your money. Swiss Banks are becoming more and more expensive. It is great to see some free alternatives!

Neon is a digital bank. It has no offices. You can manage your money entirely from your phone. With your bank account, you will receive a Mastercard that you can use for your payments. And you can use the mobile application to pay your bills and transfer money to other bank accounts.

One of the great things with Neon, compared to other digital alternatives is that your funds are insured! If it goes bankrupt, you are insured up to 100’000 CHF! You have the same security as if you had a class bank account.

We are going to see exactly what is Neon! Should you use it? How does it compare to other Swiss banks? And what about Revolut?

Neon

Neon Mobile Application
Neon Mobile Application

Neon is a brand new player in the Swiss banking industry. It is an entirely digital bank. You will do everything with your smartphone. They do not have any office you can do business at.

Their main point is to provide free banking to everybody in Switzerland. Since they do not have big offices, not many employes and they do not pay huge bonuses to their managers, they can afford to have very good prices. This is not the case for most big banks in Switzerland!

There are some limitations as to who can open a Neon account. You need to be over 16 which is the same limitations as for most Swiss banks. But you need a Swiss domicile and you need to pay your taxes exclusively in Switzerland to open a Neon account. But you can be a foreigner living in Switzerland as long as you are declared here!

Don't pay for a bank account, use Neon, the new Free Digital BankClick To Tweet

Neon uses two-factor security in order to make your account more secure. You really need to activate this feature. And you need to use a strong password in order to make sure nobody can access your account.

Is Neon a Bank?

Your balance on the Neon Application
Your balance on the Neon Application

Interestingly Neon is not a bank! They do not have a banking license. However, they do not have to be. Your accounts are directly managed by a bank Hypothekarbank Lenzburg.

The biggest advantage is that, contrary to other digital banks, your money is fully insured according to Swiss laws. That means that 100’000 CHF of your account will be protected by law!

Moreover, this also means that Neon can focus on what they do best: their mobile application and their products. And the official bank can focus on what they do best: manage money!

Neon Fees

Neon Mobile Application
Neon Mobile Application

The Fees of Neon is really where they are shining! Almost everything is entirely free! If you follow a few rules, it will actually be entirely free for you!

First of all, opening an account is totally free. And there is no management fee! And all your payments in CHF will be free as well. This is a great start I believe!

Your Neon MasterCard will be free as well. This is very important because the most important feature of a credit card is to be free! You can also withdraw twice per month for free. After that, you will have to pay 2 CHF per withdrawal.

Abroad, the card is a bit more expensive. If you withdraw money abroad, you will pay a 2 CHF fee. And for any transaction outside of Switzerland, you will have to pay 1.8% of fees.

If you only use your Neon card in Switzerland, it will be entirely free! This is much better than most Swiss bank accounts!

Neon vs Migros Bank

I am using Migros as my Swiss bank. I think it is the best Swiss bank currently. Let’s see how they compare with Neon.

Neon is entirely digital while Migros is still a mortar bank. However, it does not matter much these days. You can do everything on both banks with your smartphone. Migros has a few more options like broker account and mortgage. But these are not options that you should generally take with your bank anyway.

They are both free for most users. However, Migros Bank is only free if you have more than 7500 CHF in your account. Otherwise, it is expensive at 3 CHF per month. If you do not hold 7500 CHF in your bank account, Neon is an excellent bank!

One advantage of Neon is that you will not have to pay for every income payment. At Migros, you have to 0.20 CHF for each incoming transaction. Incoming transactions are free with a Neon bank account.

There is a big difference between the cards offered by Migros and Neon. Migros card is a Maestro while Neon’s is a Mastercard. Sometimes it is quite practical to have a Maestro in Switzerland. There are many administration offices that only take Maestro cards and not Mastercard. But you can also almost always pay cash. You will not be entirely blocked with only a Mastercard either.

Another advantage of Migros is that you have no limits on withdrawals. If you use a lot of cash, you should use Migros over Neon.

I think that both banks are equivalent. I could save a little money with Neon with incoming payments. This would be about 2 CHF saved every year. This is not worth the trouble of changing to a new bank account. And I would rather keep a Maestro separate to my credit cards for some cases.

Neon vs Revolut

Another option I have talked about before is using Revolut Credit CardRevolut allows you to do transactions in foreign currencies with no transactions fees.

On the other hand, you have to pay 1.8% of fees for foreign currency transactions with Neon. So it will not replace your Revolut card. You should use your Revolut card for foreign transactions.

But should you use Revolut instead? No. Neon has one big advantage over Revolut, your assets are insured up to 100’000 CHF. Assets on Revolut are not insured by law. This is because Revolut is not a bank. But Revolut may become a bank later.

Another advantage of Neon over Revolut is that you have no limit for free withdrawals. You can only withdraw twice a month with Neon but with no limit. With Revolut, you can only withdraw 200 CHF per month for free with Revolut.

For now, it is still good to have a real bank in Switzerland for monthly payments and a small emergency fund. And in Switzerland, it is still necessary to get some cash from time to time. And Neon is an excellent alternative to other mortar banks.

So you need both a Swiss bank account and a free foreign currency card in order to minimize your fees!

Neon as a Credit Card

Neon MasterCard
Neon MasterCard

While it is a very good bank account, it is a bad option for a credit card. You should not use your Neon Mastercard to do any payment in Switzerland!

The reason is very simple: there is no cashback using the Neon credit card. It is free, but that is not enough to make a good credit card.

In my credit card strategy, I am using two credit cards:

  • Swisscard Cashback American Express with 1% cashback. I am using this card every time it is possible.
  • Cumulus Mastercard with 0.33% cashback. When American Express is not supported, I use this second card.

Both these cards are free and both these cards have higher cash back.

So, you may use it as your bank account. But you should not use Neon as a credit card!

Conclusion

Neon is an excellent bank for Swiss people. If you use it correctly, it is one of the best Swiss banks. You will not have any fees to pay. Neon and Migros Bank are currently the best Swiss banks. If you do not mind an entirely digital bank, Neon could be perfect for you!

If you are still using an expensive bank such as PostFinance, UBS or Credit Suisse, you should really consider changing to a cheaper bank such as Neon! And if you do not want a digital bank, Migros Bank is the next best alternative but you will pay a bit more.

Now, you need to be careful to not use it too much. First of all, you do not want to use it as a credit card for your payment. You need a credit card with some cashback for this. And second, you should not use your Neon card for foreign transactions. For this, you should use a Revolut card.

I am personally not going to open an account at Neon. However, it is an excellent alternative to typical Swiss banks. Indeed, it is free and already has a good reputation from its clients. But it is still fairly new. We will see how this reputation stands. If I had to open a new bank account now, I would probably go with Neon.

To find the best credit cards to go with your free bank account, you can read about my ideal credit card strategy.

What do you think about Neon? Do you use this bank?

Author: Mr. The Poor Swiss

Mr. The Poor Swiss is the main author behind thepoorswiss.com. In 2017, he realized that he was spending more and more every year, falling into the trap of lifestyle inflation. He decided to cut on his expenses and increase his income. This blog is relating his story and findings. In 2018, he saved more than 40% of his income. He made it a goal to reach Financial Independence. You can send Mr. The Poor Swiss a message here.

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