N26 is a fully digital bank founded in Berlin, Germany in 2013. For six years, it was only available in Europe and the U.K., but in July 2019, N26 expanded to the U.S. and established a new headquarters in New York City. In February 2020, it announced it would no longer be able to operate in the U.K. as a result of Brexit.
Deposits in Europe are insured through the German banking system, and in the U.S. they are insured through a partner bank and the FDIC. The bank has headquarters in Berlin, New York, and a few other European cities, but like many online banks, they have no physical bank branches. While N26’s mobile app is one of the best banking apps we’ve ever tested, particularly for compartmentalizing your savings, it’s worth noting that as of 2020, none of its U.S. accounts are interest-bearing.
N26 at a Glance
- Track spending in real-time
- Easy-to-use, robust mobile features
- Comprehensive mobile app security features
- Fee-free card transactions internationally
- MoneyBeam feature lets you transfer money to friends and family instantly
- No bank branches or ATMs
- Surcharge for currency withdrawals
- Long customer service wait times
- Relatively high fees in U.S.
- Service fees attached to premium features
What’s interesting about N26
The biggest pros when it comes to N26 is the simplicity of the whole thing. Every transaction, everything takes place online. Money transfers, currency conversions and almost everything you can imagine is simple enough. While there are fees to withdraw cash in a currency not your own, they can be avoided by simply using your Master Card tied to the account. The other fantastic feature is the spending tracking, and the ability to earn interest, albeit low rates, on savings you put in “spaces,” which are essentially sub-accounts, so you don’t spend the money accidentally. Each can be labeled with its purpose using a hashtag.
Support for Google Pay and other cardless payments is another big bonus, as is how seriously the company takes security, with many features in the app that make it exceptionally hard for someone to steal your information or your money. Also, if you spot bugs and vulnerabilities in the system, you can get paid for pointing them out. Referral bonuses also offer incentives to share the app with your friends and family and get them to sign up.
Things to consider
The downside of a digital bank like N26 is simple. With no branches, no ATM network and slow customer service, you pretty much need to be a tech-savvy and self-sufficient banker. You may incur fees from using other ATMs, but these can be avoided by using other ways to get cash, like cash back on debit purchases.
There are other fees as well, ones you will have to be clever to avoid. And if you want premium features, there is a monthly fee involved in those accounts.
Customer service can take a long time to reach, but it is getting better as the bank grows and expands. It is important to keep in mind that N26 is a young bank and has only been around since 2013 and in the U.S. since 2019. It’s pretty fair to say that at the rate it is improving and the number of customers it’s reaching, customer service and features will only get better over time.
Finally, N26 is not a full-service bank, so it does not offer things like loans, credit cards, mortgages, money market accounts and other financial products. However, because of the low overhead and the fee-free nature of most transactions, it may be worth exploring to avoid the charges you encounter from larger banks, or if you have very basic banking needs.
Checking and savings accounts
Essentially, this online bank offers a checking account that is similar to the cash management accounts offered by brands like SoFi and other similar digital banks, with the difference being that N26 is actually a licensed bank in Germany and works with a single partner bank in the United States, so accounts are directly insured and protected. The company follows more stringent banking regulations
The Spaces feature, the equivalent of a savings account, is really just a sub-account to keep you from spending money accidentally, and the APY is very low for a digital bank. As we stated earlier, that may change over time as the bank grows.
However, that does not mean this is not a good answer for short term savings and checking options. At many other banks, transferring out of savings and even ATM transactions will cost you a fee nearly every time.
Money market accounts
Like many digital banks, N26 does not offer money market accounts, but there are financial institutions that do. BMO Harris offers outstanding rates well over 2% at the moment, while BBVA and UFB direct also have competitive rates as well.
Keep in mind that many money market accounts require a minimum deposit and that you maintain a minimum balance to get the offered rate. Be sure that you understand all restrictions and that you keep them in mind when choosing a money market account.
N26 also does not offer certificates of deposit. However, there are options offered by Capital One 360 and Ally Bank that are competitive and offer a variety of terms and interest rates.
The term for CDs can range from 3 months up to 5 to 10 years. There is usually a penalty for early withdrawal, but some CDs offer the option to add money at any time during the term. The longer the term, usually the better the rate. Also keep in mind that variable rate CDs are the best most of the time. The reason is that if rates go up, so does your return on your investment. Fixed rates are fine for shorter terms around one year.
N26 does not have a credit card option. Depending on whether you are looking for a rewards card, from travel to cash back rewards, low interest rates, or a deal on balance transfers there are a lot of options out there.
Some of the best are offered by Chase, Capital One and Discover. Both Chase and Capital One have some options available for those who have less than perfect credit or no credit at all, and are looking to rebuild.
Because it’s a digital bank that is mostly expanded in Europe, there are no personal loan products available to U.S. customers. For personal loans, try out Lending Club. Lending Club is a peer-to-peer loan marketplace that matches lenders and borrowers based on their needs and credit histories. Borrowers can secure up to $40,000 with Lending Club and use the funds for debt consolidation, medical bills and more.
Just like with personal loans, N26 Bank also does not offer mortgage loans. Instead, check out Lower.com. This new mortgage lender and refinancer offers extremely low mortgage rates and an artificial intelligence assistant that helps you discover which mortgage product is right for you.
As with other loans, N26 Bank does not currently offer any mortgage refinancing options. If you’re looking to refinance your home loan, look into Quicken Loans’ products through Rocket Mortgage or Axos Bank’s refi products. Both can be applied for online and both have a wide range of terms and interest rates you can take advantage of.
Home equity loans and HELOCs
This bank does not offer home equity loans or HELOCs, so you’ll have to turn elsewhere to take advantage of your home equity. Take a look at what Fifth Third Bank offers in terms of HELOCs — it offers low intro rates, no closing costs and the option to lock in your rate to make it fixed instead of variable.
Unfortunately, N26 also does not offer auto loans or refinancing. However, a very popular and reputable auto lender is LightStream, the lending division of SunTrust Bank. With LightStream, customers can apply for preapproval online and expect funding for that new car quickly. Furthermore, LightStream will beat any interest rate for a loan by a competitor by 0.10%, making it a worthwhile competitor in the auto lender industry.
The final word
Put simply, N26 is a great bank for young people with minimal needs when it comes to banking services and those who are tech-savvy and comfortable with a completely digital banking experience. It could also work for others who simply wanted an alternative to traditional banking, and who are tired of fees eating away at their hard-earned money. This works when bundling banking services really isn’t saving you money, or when you want to just have money in a separate account you access less often.
It won’t work for those who are tech-averse, who want an in-person, personal experience, of who use cash often in their daily transactions, and need ready access to ATMs and depositing cash. It also is not the best fit for those looking for an entire suite of services in a single bank, especially those who have more complex banking needs.
No matter what, if you are looking for some simple, fee-free banking services and don’t mind complete virtual banking, N26 should be on the top of your list of banks to check out.