Wise (Transferwise) new Interest accounts

Wagster

Hello,

I have a Wise account and use the features regularly. Wise has recently started advertising a feature where you can earn interest. It sounds like a regular bank account with interest but also... not! It mentions "Capital at risk" but also that it is backed 100% by the government. Is anyone using this feature/offering? How does it differ from a regular high street bank account offering interest? Just wondering if it's a good idea to sign up...

There's more info on the Wise blog - https://wise.com/gb/blog/interest-asset-smarter-than-your-bank

Thanks for your help.

Altior

The linked explainer explains it better than that blog post.

Sitting on your Wise money? It’s time to get growing. - Wise, formerly TransferWise

Altior

There's no huge upside as presumably there are not many people that would hold huge cash sums in accounts that aren't paying interest. If they were financially sophisticated enough to want to use this account, anyway.

Band7

The important bits in the blog are 

Growth not guaranteed. Capital at risk.

No savings of any kind are guaranteed or backed by the UK or other Government, and the Wise blog doesn't actually say that your deposits would be backed in any way or subject to any guarantee. They just use weasel words to lure you in. Shame on Wise.

Wagster said:

How does it differ from a regular high street bank account offering interest?

It's quite simple - in high street bank accounts your deposits are guaranteed up to £85k (FSCS). In Wise, none of your deposits are guaranteed by FSCS or any other scheme.

Wagster said:

 Just wondering if it's a good idea to sign up...

Unless you feel like a gamble with your money: No.




Note also that FSCS is not a Government scheme, but a statutory industry-funded scheme.

wmb194

Wagster said:

Hello,

I have a Wise account and use the features regularly. Wise has recently started advertising a feature where you can earn interest. It sounds like a regular bank account with interest but also... not! It mentions "Capital at risk" but also that it is backed 100% by the government. Is anyone using this feature/offering? How does it differ from a regular high street bank account offering interest? Just wondering if it's a good idea to sign up...

There's more info on the Wise blog - https://wise.com/gb/blog/interest-asset-smarter-than-your-bank

Thanks for your help.

The explanation is that it's invested in short-dated government bonds and "loans" so should be low risk but not entirely risk-free e.g., remember a few months ago when gilt prices lurched all over the place following the disastrous "mini" budget.

Looking in the app, it's invested in the following funds:

Euros - BlackRock ICS Euro Government Liquidity Fund
Sterling - BlackRock ICS Sterling Government Liquidity Fund IE00B43PVC83
US dollars - BlackRock ICS US Treasury Fund

Flavour for the US fund, "At least 99.5% of the Fund’s assets will be securities, instruments or obligations issued or guaranteed by the United States government or another sovereign government and reverse repurchase agreements referencing such assets. These assets shall always be denominated in US Dollars. They will be high quality (according to the Investment Manager’s assessment of credit worthiness) at the time of purchase."

Band7

wmb194 said:

Flavour for the US fund, "At least 99.5% of the Fund’s assets will be securities, instruments or obligations issued or guaranteed by the United States government or another sovereign government and reverse repurchase agreements referencing such assets. These assets shall always be denominated in US Dollars. They will be high quality (according to the Investment Manager’s assessment of credit worthiness) at the time of purchase."

This doesn't mean that you have any guarantee that you will get back what you deposited. For starters, you assume an exchange risk, as well as exchange charges.

[Deleted User]

I'm not keeping my Benjis in Wise. 
I want somewhere with deposit protection. 

Wagster

Thanks for your comments everyone. Seems we were right to be sceptical! 

OceanSound

I've about 50 EUR in my wise jar. Figured I may take a gamble and invest this. 

Couple of red flags. After going through a multitude of pages in the registration process final step had two links to two documents. One was 'key investor information'. 

That document could not be accessed. Gave an error. 
Still, I tapped confirm to sign up (remember I was going to trial this with only 50 EUR in my jar), again, an error. Also, Error didn't stay on screen long enough for me to take screenshot. 

I'd stay away.

ArJay_2

I actually found it surprisingly quick and easy (a few minutes) at least for the Euro version. I don't intend it to be a savings account but an ongoing Euro float that I can easily convert to GBP at a market rate when needed (unlike my Euro account at HSBC - about 4% worse!) Starling sounds good, but that's yet another bank account and no interest paid of course.

adindas

People might not use it as a main account or hold their GBP. But it might be useful to hold foreign currencies you will be spending anyway in the near future such as future travel in a specific country. It could be used it to exchange a specific currency in advance to be used in the near future when you believe the exchange rate is in your favour. The good things here is that it includes a reasonable number of countries.

Earning: USD:3.29%, GBP: 2.52%, EUR:0.88% is an improvement.  It is quite reasonable considering central bank rate for USD:3.80%, GBP: 2.93%, EUR:1.40. Hopefully other banks will follow.