Interest on USD with Wise?

pecunianonolet

Hi,

Can anyone share experience holding USD with Wise and getting interest?

- Are invested USD easy/daily access with Wise?
- When do they pay interest (daily, monthly, annually)? Website says something about it being added daily but do they mean daily calculated or daily paid (compounding)?
- Can you link the USD Wise account to Paypal to transfer USD from Paypal to Wise? Was thinking to use the digital card and link that to Paypal and use that to pay out from Paypal. From the card I should be able to move to the account for interest?
- Are there any hidden fees? Looks like a wire transfer pay in comes at a $4.14 fee as shown in the app?


Current rate is 4.55% according to the website and in the app it shows 4.79% variable and that is better than 0% I get at the moment with funds sitting in Paypal. 

I am aware, Wise is not a bank so no FSC protection.

DavidT67

Your interest asset jar balance increases daily, you don't see the interest as a transaction.  You do see the monthly platform fee deducted from your currency balance each month.  As the jar is invested in a short term money market fund with Blackrock, you do get FSCS protection.

Futuristic

- Are invested USD easy/daily access with Wise?

Yes

- When do they pay interest (daily, monthly, annually)? Website says something about it being added daily but do they mean daily calculated or daily paid (compounding)?

Its updated daily and your account balance increases

- Can you link the USD Wise account to Paypal to transfer USD from Paypal to Wise? Was thinking to use the digital card and link that to Paypal and use that to pay out from Paypal. From the card I should be able to move to the account for interest?

No. You cannot withdraw from PayPal to Wise or anywhere else in different currencies other than £. This is how PayPal still make their money from rip off FX.

- Are there any hidden fees? Looks like a wire transfer pay in comes at a $4.14 fee as shown in the app?

https://wise.com/gb/pricing/

There's fixed fee if you deposit via wire of that $4.14 (any amount). For the interest account itself Wise already show the interest rate after fees taken off. 0.19% service fee is taken monthly at the start of the month.

pecunianonolet

Futuristic said:

- Are invested USD easy/daily access with Wise?

Yes

- When do they pay interest (daily, monthly, annually)? Website says something about it being added daily but do they mean daily calculated or daily paid (compounding)?

Its updated daily and your account balance increases

- Can you link the USD Wise account to Paypal to transfer USD from Paypal to Wise? Was thinking to use the digital card and link that to Paypal and use that to pay out from Paypal. From the card I should be able to move to the account for interest?

No. You cannot withdraw from PayPal to Wise or anywhere else in different currencies other than £. This is how PayPal still make their money from rip off FX.

- Are there any hidden fees? Looks like a wire transfer pay in comes at a $4.14 fee as shown in the app?

https://wise.com/gb/pricing/

There's fixed fee if you deposit via wire of that $4.14 (any amount). For the interest account itself Wise already show the interest rate after fees taken off. 0.19% service fee is taken monthly at the start of the month.

So you are saying I am bound with Paypal that if the USD I receive have to go through their inflated fx process?

Paypal has the Xoom Platform and you can send to bank account, debit card, credit card and Paypal balance and they take a fee. 1 USD for sending to a bank account and 1.99 for everything else. Could use that and send it that way to the virtual Wise debit card. 

Could I not change the standard currency of my Paypal account to USD and withdraw for free tat way? 

We're only talking ca $100 at the moment so not much and probably not worth the fuss. 

Could open an account with Fineco to have a USD acccount but looks like getting it out in the nomial currency from Paypal is the key issue.

Futuristic

pecunianonolet said:

Futuristic said:

- Are invested USD easy/daily access with Wise?

Yes

- When do they pay interest (daily, monthly, annually)? Website says something about it being added daily but do they mean daily calculated or daily paid (compounding)?

Its updated daily and your account balance increases

- Can you link the USD Wise account to Paypal to transfer USD from Paypal to Wise? Was thinking to use the digital card and link that to Paypal and use that to pay out from Paypal. From the card I should be able to move to the account for interest?

No. You cannot withdraw from PayPal to Wise or anywhere else in different currencies other than £. This is how PayPal still make their money from rip off FX.

- Are there any hidden fees? Looks like a wire transfer pay in comes at a $4.14 fee as shown in the app?

https://wise.com/gb/pricing/

There's fixed fee if you deposit via wire of that $4.14 (any amount). For the interest account itself Wise already show the interest rate after fees taken off. 0.19% service fee is taken monthly at the start of the month.

So you are saying I am bound with Paypal that if the USD I receive have to go through their inflated fx process?

Paypal has the Xoom Platform and you can send to bank account, debit card, credit card and Paypal balance and they take a fee. 1 USD for sending to a bank account and 1.99 for everything else. Could use that and send it that way to the virtual Wise debit card. 

Could I not change the standard currency of my Paypal account to USD and withdraw for free tat way? 

We're only talking ca $100 at the moment so not much and probably not worth the fuss. 

Could open an account with Fineco to have a USD acccount but looks like getting it out in the nomial currency from Paypal is the key issue.

No, even if you have USD balance you cant withdraw to USD bank account in USD. PayPal will force you to convert to gbp/fail. 

You could try Xoom but for that amount it's not really worth the hassle. 

pecunianonolet

Futuristic said:

pecunianonolet said:

Futuristic said:

- Are invested USD easy/daily access with Wise?

Yes

- When do they pay interest (daily, monthly, annually)? Website says something about it being added daily but do they mean daily calculated or daily paid (compounding)?

Its updated daily and your account balance increases

- Can you link the USD Wise account to Paypal to transfer USD from Paypal to Wise? Was thinking to use the digital card and link that to Paypal and use that to pay out from Paypal. From the card I should be able to move to the account for interest?

No. You cannot withdraw from PayPal to Wise or anywhere else in different currencies other than £. This is how PayPal still make their money from rip off FX.

- Are there any hidden fees? Looks like a wire transfer pay in comes at a $4.14 fee as shown in the app?

https://wise.com/gb/pricing/

There's fixed fee if you deposit via wire of that $4.14 (any amount). For the interest account itself Wise already show the interest rate after fees taken off. 0.19% service fee is taken monthly at the start of the month.

So you are saying I am bound with Paypal that if the USD I receive have to go through their inflated fx process?

Paypal has the Xoom Platform and you can send to bank account, debit card, credit card and Paypal balance and they take a fee. 1 USD for sending to a bank account and 1.99 for everything else. Could use that and send it that way to the virtual Wise debit card. 

Could I not change the standard currency of my Paypal account to USD and withdraw for free tat way? 

We're only talking ca $100 at the moment so not much and probably not worth the fuss. 

Could open an account with Fineco to have a USD acccount but looks like getting it out in the nomial currency from Paypal is the key issue.

No, even if you have USD balance you cant withdraw to USD bank account in USD. PayPal will force you to convert to gbp/fail. 

You could try Xoom but for that amount it's not really worth the hassle. 

What about changing the primary currency in Paypal to USD?

jbryce

DavidT67 said:

Your interest asset jar balance increases daily, you don't see the interest as a transaction.  You do see the monthly platform fee deducted from your currency balance each month.  As the jar is invested in a short term money market fund with Blackrock, you do get FSCS protection.

Just be aware that a money market fund is not a bank account. It is an investment account that invests in short-dated bonds, so the value of your investment can go down as well as up. It is less likely to do either than with more risky investment accounts, but the risk isn't zero. The FSCS doesn't protect you against poor investment performance.

pecunianonolet

jbryce said:

DavidT67 said:

Your interest asset jar balance increases daily, you don't see the interest as a transaction.  You do see the monthly platform fee deducted from your currency balance each month.  As the jar is invested in a short term money market fund with Blackrock, you do get FSCS protection.

Just be aware that a money market fund is not a bank account. It is an investment account that invests in short-dated bonds, so the value of your investment can go down as well as up. It is less likely to do either than with more risky investment accounts, but the risk isn't zero. The FSCS doesn't protect you against poor investment performance.

Thanks but I understood that if I put 100 USD in and get 4.55% interest my 100 USD are growing and will always be 100 USD plus interest. 

adindas

pecunianonolet said:

jbryce said:

DavidT67 said:

Your interest asset jar balance increases daily, you don't see the interest as a transaction.  You do see the monthly platform fee deducted from your currency balance each month.  As the jar is invested in a short term money market fund with Blackrock, you do get FSCS protection.

Just be aware that a money market fund is not a bank account. It is an investment account that invests in short-dated bonds, so the value of your investment can go down as well as up. It is less likely to do either than with more risky investment accounts, but the risk isn't zero. The FSCS doesn't protect you against poor investment performance.

Thanks but I understood that if I put 100 USD in and get 4.55% interest my 100 USD are growing and will always be 100 USD plus interest. 

https://wise.com/gb/interest/
"Big rewards, low risk

To protect your money while offering you a good return, we’ve partnered with BlackRock, the world’s largest asset manager. When you switch to Wise Interest, your money’s in a fund holding government-backed assets. This fund is low risk because its assets are guaranteed by the government. There are fund fees — 0.29% annually, which is £2.90 for every £1,000 you hold in Interest. To make things clearer, our fees are already factored into our rates."

uptdale

Bear in mind that the UK tax treatment of Wise interest is a little different from the UK tax treatment of UK interest or foreign interest.  I can't see anything on the Wise website explaining the UK tax treatment, but there is some explanation in the BlackRock prospectus (https://www.blackrock.com/cash/en-gb/stream-document?stream=reg&product=L-ILSG&shareClass=SELECT+ACC+T0&documentId=1393108~1391594&iframeUrlOverride=/cash/literature/prospectus/ics-prospectus.pdf).  The BlackRock fund is an offshore fund, and from HMRC Helpsheet HS262 it looks like you are taxed on your share of the income received by the BlackRock fund.  So it seems the interest is reported as "income received by a person abroad" in Box 13 of the Foreign pages (SA106) of the self assessment tax return, not as "interest and other income from overseas savings" (Box 4).

wmb194

uptdale said:

Bear in mind that the UK tax treatment of Wise interest is a little different from the UK tax treatment of UK interest or foreign interest.  I can't see anything on the Wise website explaining the UK tax treatment, but there is some explanation in the BlackRock prospectus (https://www.blackrock.com/cash/en-gb/stream-document?stream=reg&product=L-ILSG&shareClass=SELECT+ACC+T0&documentId=1393108~1391594&iframeUrlOverride=/cash/literature/prospectus/ics-prospectus.pdf).  The BlackRock fund is an offshore fund, and from HMRC Helpsheet HS262 it looks like you are taxed on your share of the income received by the BlackRock fund.  So it seems the interest is reported as "income received by a person abroad" in Box 13 of the Foreign pages (SA106) of the self assessment tax return, not as "interest and other income from overseas savings" (Box 4).

It's an ETF, not a person or trust, so that doesn't sound right.

Wise is using Irish domiciled accumulating ETFs with UK reporting status so I presume it's a case of treating the increase in the value of the units as a capital gain on disposal and the undistributed income as excess reportable income (ERI), which in this case, as it invests in bonds, is treated as foreign interest.

YMMV for the others but the good news is that I checked the KPMG ERI database for the euro one for the past few years and it had no excess to report, so nothing to worry about anyway.

Extract from the taxation section of the prospectus for this range of BlackRock ICS ETFs ("Institutional Cash Series plc"):