Having multiple banking options makes more sense than ever in 2023. And opening a neobank account online has become both fast and simple. But what exactly are neobanks, and are they safe? Let’s take a look at some of the pros and cons of using these below…
Having more than one place to store your money makes sense for the same reason it makes sense to have more than one bank card; if you lose one, you can still access your money.
And if those accounts are situated in more than one country, all the better.
If you were sitting in London in January of 2022 and sent ten bucks to the Canadian freedom convoy, you’d probably understand why we say this.
Or if you woke up – also around a year ago – as an ordinary Russian, to discover that your Russian bank card no longer worked while you were traveling in a Western country. And that you could no longer transfer any money in or out of Russia…then you’d fully understand the benefits of having an offshore bank account.
Having banking options means that you’re less vulnerable to the whims of individual governments… To being canceled, or to being persecuted financially based on your personal beliefs.
And you’d certainly be more shielded from the terrible games governments play (like in the case of Russians).
The thing is…
Opening an overseas bank account tends to be fairly hard – and expensive. And unless you pay a professional service provider, you typically have to travel to that country in order to have your new account opened and activated.
Fortunately for ordinary folks, the rise of so-called “neobanks” like TransfersWise (now Wise) has meant that opening a de facto overseas “bank account” has become a lot simpler.
What is a neobank?
Neobanks, also known as digital banks or online-only banks, are financial institutions that operate exclusively online without physical branches. They have become increasingly popular in recent years due to their convenience, accessibility, and competitive rates. However, there are also some drawbacks associated with neobanks.
What are the pros and cons of neobanks?
- Convenience: Neobanks allow customers to manage their finances entirely through their mobile devices or computers, making banking more accessible and convenient than traditional banks.
- Low fees: Many neobanks have low or no fees for basic banking services, such as account maintenance, ATM withdrawals, and foreign currency transactions.
- Competitive rates: Neobanks often offer higher interest rates on savings accounts and lower interest rates on loans compared to traditional banks.
- Innovative features: Neobanks often offer innovative features such as budgeting tools, instant notifications, and real-time transaction tracking that traditional banks may not provide.
- Global accessibility: Neobanks often allow customers to use their accounts and cards worldwide without incurring extra fees, making them a great option for international travelers or people living abroad.
- Limited services: Neobanks often do not offer the same range of financial products and services as traditional banks, such as mortgages, business loans, or investment services.
- Lack of physical branches: While some neobanks have partnered with traditional banks to offer in-person support, many do not have physical branches, which may be inconvenient for customers who prefer face-to-face interactions.
- Security concerns: Neobanks are relatively new, and their security measures may not be as well-established as those of traditional banks. Additionally, customers may be more vulnerable to online fraud and hacking.
- Less established reputation: Neobanks are still relatively new and may not have the same level of trust or reputation as traditional banks that have been around for decades.
- Limited customer support: As neobanks often do not have physical branches, customer support may be limited to online chat or phone support, which may not be as responsive or helpful as in-person support.
Here’s a list of famous neobanks (2023)
Please note that we don’t endorse or promote any of the below neobanks in any way – these are just some of the most widely known and used ones, and they’re listed here for informational purposes only.
While using neobanks come with certain risks – including potential hacking threats and a lack of deposit insurance – they can nonetheless play a vital role in your Plan B strategy.
And while we’d personally not keep large amounts of money in a neobank, there is no downside to having ready cash available in the event of government overreach or a range of other potential crisis scenarios.
Yours in freedom