Not convinced by N26? Here are the other digital-only banks you can consider.
N26 is a German-born digital bank that launched in the UK in late 2018. It currently offers three current account options with a slick app and a set of features that are especially appealing to frequent travellers. However, it entered a market that was already pretty competitive and when it comes to digital current accounts, you’re spoilt for choice. So which is best?
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Banks like N26 for day-to-day banking
Challenger banks don’t offer a whole lot of products, but at the very least you can expect a debit card, a fee-free current account and a well-structured mobile app that helps you keep track of your spending and make payments easily.
Here are the main alternatives to N26. You won’t be charged for using the card or making bank transfers in the UK by any of them, but there are (slight) differences when it comes to other features.
- Monzo. Monzo is the most popular challenger bank in the UK (2 million customers). As it grows, it’s also becoming more sophisticated, and these days its current account has pretty much all the features you can expect: free ATM withdrawals, cash load at all PayPoints (for £1 a transaction), direct debits, Apple Pay, Google Pay and an overdraft option that costs 50p a day up to £15.50 a month (the first £20 is free of charge).
- Starling. Starling Bank “only” serves 500,000 customers at the moment, but it has all it needs to compete with Monzo and maybe even a bit more. Cash loads are free at every Post Office in the UK and overdrafts are charged an annual 15% rate.
- Revolut. Originally created more as an “alternative” card to travel and send money abroad, Revolut can still be a good option in the UK, but it has some drawbacks. Free ATM withdrawals are capped to £200 a month (there’s a 2% fee after that) and you can’t set up direct debits, apply for an overdraft or deposit cash on your account.
Day-to-day banking: The verdict
Monzo and Starling are totally the top players here, but it’s a close call. Ultimately, we’ve picked Starling because you can deposit cash on your account for free and because in most cases overdrafts will end up being cheaper than with Monzo. For example, going overdrawn by £100 for 7 days will cost you £3.50 with Monzo, but only £0.27 with Starling.
- Download and apply for a current account in 3 minutes
- Order your card and get started
- No more admin, no more delays, no more fees
- Protected by the FSCS
- Instant notifications and payments
Cards like N26 for travelling
All the challengers mentioned above (apart from Monese) easily beat most traditional banks when it comes to making payments abroad, simply because they don’t charge a foreign currency transaction fee. The foreign currency transaction fee is a percentage that’s added to all your payments made in another currency by most banks; it can be up to 3% of the transaction, which makes your holiday bank charges pretty expensive.
Instead, fee-free card spending abroad is a given with these challengers, so you’ll need to look at other features to compare them:
- ATM withdrawals abroad. N26 isn’t great on those, because they’re charged at 1.7% unless you subscribe to N26 You or Metal. Monzo and Revolut don’t charge for them up to £200 a month (after that, Monzo charges a 3% fee and Revolut 2%). Finally, with Starling they’re free up to £300 a day.
- Euro accounts. If you’re an EU national living in the UK, or the other way around, you probably already know how annoying it is having to deal with two different currencies all the time. Starling and Monese offer a solution to the problem through a fee-free euro account you can open alongside your regular sterling one.
- Money transfers. Starling offers competitive rates and Monzo has a partnership with TransferWise, but it’s hard to beat Revolut’s fee-free money transfers. You can send money in 29 currencies at the interbank rate for free, up to £5,000 a month.
Travelling: The verdict
When it comes to all foreign currency things, the choice is between Starling and Revolut. For travelling, Starling tops the league: if you go somewhere where cash is still the main payment method, as is the case for many countries outside Europe, Revolut’s £200 monthly limit on free ATM withdrawals can be annoying.
On the other hand, fee-free money transfers are Revolut’s specialty – everyone else, including dedicated money transfer companies, charges at least a small fee. So if you also need to send money out of the country every now and then, Revolut is probably your best option.
- Spend abroad with no fees
- Great for international students
- Simple to set up
- Visualise your spending in real time
- Trusted by 2 million users
Alternatives to N26 for saving
If you’re only looking for top-paying savings accounts, challengers aren’t your best shout; you should rather take a look at what traditional banks offer.
However, they still have something to offer to savers:
- Better budgeting features. Starling, Revolut, Monzo and N26 all automatically categorise your spending, to help you figure out how much you’re spending for what. They also let you set saving goals and put your money in separate sub-accounts (referred to as Goals, Vaults, Pots and Spaces) when you save. Monzo and Revolut also have a round-up feature that automatically rounds up your transactions and save your spare change if you activate it.
- Atom has a good selection of fixed-term savings accounts. Atom Bank is a digital-only bank, but unlike the others we’ve mentioned, it only does savings accounts and mortgages. There are no easy-access options, but for fixed-terms savings accounts, the rates are fairly competitive.
- Starling pays a small amount of interest on your current account balance. 0.5% up to £2,000, 0.25% between £2,000 and £85,000.
- Monzo is building a savings marketplace. It currently has three providers and nine account options (the top-paying one is a 12-month fixed-term account that has a 1.55% rate). You’ll still get a better deal if you apply directly on the providers’ websites though.
Savings: The verdict
There is no unique winner here. Among challengers, Atom is the one that specialises in savings accounts, and if you want a fixed-term one, it can be competitive.
Monzo tops the league for easy-access accounts instead, but what you’re doing is actually opening a separate account with another company, so you have to decide whether it really counts. Finally, Starling is the only one that pays interest directly on your current account balance, but again, there are traditional banks with more competitive rates out there.
Are challengers safe?
The short answer is yes, all the challengers we’ve mentioned are registered with the Financial Conduct Authority (FCA) and fully authorised to do what they do. However, there is a slight difference when it comes to how your money is protected:
- Financial Services Compensation Scheme (FSCS). It protects all deposits up to £85,000 and applies to institutions that have a full banking licence. That is: Monzo, Starling, Atom bank and N26 (whose licence is registered in Germany, and so is the deposit protection).
- Segregated accounts. Institutions that only have a licence for dealing in electronic money have to keep all clients’ money in segregated accounts, from where it can’t be used to pay the company’s debt and is thus safe in case of bankruptcy. That’s the case for Monese; Revolut recently got a European banking licence, but until it’s fully finalised, deposit protection doesn’t apply and client money will still be kept separate from company money.