Bank like a local with Transferwise’s new borderless debit card

A ‘borderless’ debit card has launched that gives people the chance to operate a bank account in several different countries around the world.

It is aimed at those travelling, living and working abroad to give them more flexibility when spending and sending money and to lower their overall costs.

It’s been launched by Transferwise, which claims it’s the first multi-country account and debit card.

This is Money has taken a closer look to see just how it works, who it suits and how the prices compare.

If you’ve ever tried to send money abroad, perhaps to a family member who was away travelling, to a company for a holiday booking, or even withdrawn cash in a foreign country, you’ll know just how expensive it can be.

This is because most of the traditional banks add on fees if you’re withdrawing money in a different currency, in euros for example, from a British bank account. 

The fees aren’t just for withdrawing cash abroad either, there can also be transfer fees if you’re moving money inbetween two bank accounts in two different countries.

To combat these fees, and to give travellers more flexibility when sending and spending in different currencies, the account from Transferwise claims to be around eight times cheaper than a traditional bank.

Kristo Käärmann, chief executive and co-founder of Transferwise said: ‘Every time people spend money on their UK debit card overseas or move money abroad with their high street bank they end up footing the bill for hidden charges and inflated exchange rates. 

‘With the borderless account people can send, spend and receive money with the real exchange rate and know exactly what the transaction is costing upfront. 

‘For freelancers and small businesses who want to attract customers worldwide, for expats, second homeowners and global nomads living between countries, the borderless account is a gamechanger.’

Here we crunch the numbers and find out just how well it compares to other accounts on the market.

Transferwise says its new ‘borderless’ account is eight times cheaper than a traditional bank

How does the card work?

When you sign up to the borderless card, you are then able to activate a bank account in a number of different countries.

Once you’ve done this you’ll be given an account number and sort code (or the equivalent depending on the country) and you can start sending and spending money with it.

The countries include; Australia, the United States, the UK and any country within the eurozone.

With these details, you can be paid in the currency for that country – in dollars for the US bank account, for example, and you can then withdraw this money in the same currency, send this money to another bank account, or withdraw the money in a different currency.

It’s free to transfer more than 40 currencies within the new ‘borderless’ account

If money is paid into the account in one currency, and you withdraw it in the same currency, there are no conversion fees and the money is converted at the interbank rate. 

But if you have one currency in the account, euros for example, and use the debit card to pay in a different currency, such as sterling, you will be charged a small fee on top ranging from 0.35 to 4.5 per cent depending on which currency you spend in. 

Are there any fees for using the card?

You’ll have to pay a small fee for withdrawing cash in a different currency

Along with the four main currencies available with the account, customers can hold and convert money in more than 40 global currencies. 

There are no subscription, sign up or monthly fees and you don’t need to maintain a minimum balance to be able to use it.

You can withdraw up to £200 per month without a fee, anything over this will have a fee of 2 per cent of whatever you’re withdrawing.   

Is the money kept in the account protected?  

Transferwise isn’t covered by the Financial Services Compensation Scheme because it doesn’t cover payment service firms, but is authorised by the Financial Conduct Authority, which has strict regulation in place to keep customer money secure. Its headquarters are in London.

Money kept within any of the Transferwise accounts is placed in a separate bank account. For UK, EU and US customers this means money deposited is actually held with either a Barclays or Wells Fargo bank account.

This means if Transferwise were to go bust, customer money is safe because it is kept in separate bank accounts, according to the firm.

Therefore the only risk would be if those banks, Barclays for example, were to go bust which is extremely unlikely. 

What impact would Brexit have on the account? 

We asked Transferwise what implications Brexit would have on the account and how it might affect how customers use it and transfer money between countries. 

A spokesperson said: ‘The most important thing for us is to be able to serve our customers. 

‘We’re currently licensed in the UK which is passported across Europe under EU regulation. 

‘It seems as though we may lose those passporting rights post Brexit, and if so we have plans to secure a licence within Europe. 

‘We’re confident customers won’t notice any difference in service either way.’

How does the price compare? 

The table below shows a range of prices for sending money abroad with the big banks, and gives an idea about the costs involved, although your actual costs will depend on your own bank.

This table is comparing Transferwise with some of the big banks but there are a number of similar companies, such as Revolut and WeSwap, which offer similar rates. 

Therefore it’s worth checking all of these before making a decision over which works best for you. 

When it comes to spending overseas for holidaymakers there are a number of different options. 

We’ve got a full round-up of the best pre-paid currency cards in our guide and it’s also worth checking if a credit or debit card would be suitable, in our guide to overseas spending.