Wise is neither a checking account nor a savings account in the traditional sense

Wise (formerly TransferWise) is a money transfer and currency exchange service, not a bank. It does not offer checking accounts or savings accounts with the features you get from a bank. What Wise does offer is a multi-currency account that holds money in different currencies and lets you spend it using a debit card or transfer it to a real bank account.

If you are comparing Wise to a checking account because you want a place to keep money and pay bills, Wise is not the right tool. If you are comparing it because you send money internationally or hold money in multiple currencies, Wise can work alongside a checking account but cannot replace one.

Key Takeaways

  • Wise is a money transfer service with a multi-currency account, not a bank offering checking or savings accounts.
  • You can hold money in Wise, spend it with a debit card, and transfer it out, but Wise does not offer the deposit protections or interest that banks provide.
  • Wise charges a fee for currency conversion and transfers, so it costs money to move funds in and out.
  • If you need a checking account for regular bills and paychecks, you still need a bank; Wise works best as a tool for international transfers or holding foreign currency.

What Wise actually is and what it does

Wise is a fintech platform that specializes in international money transfers and currency exchange. You create an account, add money to it (usually by linking a bank account or debit card), and then you can transfer that money to other countries, hold it in multiple currencies, or spend it using a Wise debit card.

The main reason people use Wise is that it converts currency at the real mid-market exchange rate—the rate banks use with each other—rather than the marked-up rate most banks charge customers. If you are sending $1,000 to the UK, Wise will typically cost you less than your bank would.

Wise is not a bank and is not insured the way bank deposits are. Money in your Wise account is not covered by the Federal Deposit Insurance Corporation (FDIC), which protects up to $250,000 in a checking or savings account at a real bank. Wise does hold customer money in partner banks, but that protection is different and varies by country.

How Wise differs from a checking account

A checking account at a bank is designed for everyday spending and bill payment. You deposit your paycheck, write checks, set up automatic payments, and the bank insures your money up to $250,000. Most checking accounts charge no monthly fee, and you earn no interest on the balance.

Wise is not designed for everyday use in the United States. You cannot deposit a paycheck directly into Wise (though some employers may allow it). You cannot write checks. You cannot set up automatic bill payments the way you do with a checking account. To use Wise money for a US bill, you would have to transfer it to your bank account first, which takes time and may cost a fee.

Wise charges a fee every time you add money to the account, convert currency, or transfer money out. A checking account typically has no per-transaction fees. If you are moving money frequently, Wise costs add up.

How Wise differs from a savings account

A savings account at a bank holds money you are not spending right now and pays you interest on the balance. The interest rate varies, but as of 2024 some online banks pay 4% to 5% annual interest on savings. Your money is FDIC-insured up to $250,000.

Wise does not pay interest on any balance you hold. If you keep $5,000 in Wise for a year, you earn nothing. Wise also does not restrict how often you can withdraw money the way some savings accounts do, but that is not an advantage—it is just a different product.

If you are looking for a place to park money and earn interest, Wise is the wrong choice. A high-yield savings account at an online bank will earn you money while you wait. Wise will not.

When Wise makes sense to use

Wise works well if you send money internationally on a regular basis. If you freelance for clients in Europe or Asia, or you support family abroad, Wise's low conversion fees and real exchange rates save you money compared to a bank wire.

Wise also works if you travel frequently or live part of the year in another country and need to hold money in that country's currency. You can load money into Wise in US dollars, convert it to euros or pounds or pesos, and spend it there using the Wise debit card. The card works at ATMs and shops in most countries.

Wise can also be useful if you receive payments in foreign currency and want to convert them without paying your bank's markup. Some freelancers and small business owners use Wise for this reason.

In all these cases, Wise works alongside a checking account, not instead of one. You still need a US bank account for your paycheck, bills, and everyday spending.

The costs of using Wise

Wise charges a fee to add money to your account (usually 1% to 2% of the amount, depending on how you fund it), a fee to convert currency (built into the exchange rate, typically 1% to 2%), and a fee to transfer money out to another bank account. The exact fees depend on the currency pair and the transfer method.

These fees are lower than what most banks charge, which is why Wise appeals to people who transfer money internationally. But they are not zero. If you are moving small amounts or moving money infrequently, the fees may not be worth it.

Wise also charges a monthly fee for some features, like the ability to receive money in multiple currencies. The basic account is free, but you pay as you use it.

Should you use Wise instead of a checking account?

No. Wise cannot replace a checking account. You need a checking account to receive your paycheck, pay US bills, and have FDIC protection on your money. Wise is a tool for specific tasks—international transfers, currency conversion, spending abroad—not a replacement for banking.

If you are asking whether Wise is a checking account or savings account because you are looking for a place to keep money safely and access it easily, the answer is that neither Wise nor a checking account is the right choice for money you are saving. A high-yield savings account at an online bank will earn you interest and protect your money with FDIC insurance.

If you are asking because you send money internationally or hold foreign currency, Wise can work well as a supplement to your checking account. Open a checking account at a bank for everyday use, and use Wise when you need to transfer money across borders.

Frequently Asked Questions

Can I use Wise as my main bank account?

No. Wise does not offer the features you need for a main account: you cannot deposit a paycheck directly, you cannot pay most US bills, and your money is not FDIC-insured. You need a checking account at a real bank for everyday banking.

Does Wise pay interest on money I keep in the account?

No. Wise does not pay interest on any balance. If you want to earn interest on money you are saving, open a high-yield savings account at an online bank instead.

Is my money safe in Wise?

Wise holds customer money in partner banks, but it is not FDIC-insured the way a bank account is. Your money is generally safe from Wise going out of business, but you do not have the same legal protection as you do with a bank deposit. For large amounts, a bank account is safer.

Can I receive my paycheck in Wise?

Some employers allow direct deposit to Wise, but it is not common. Most people receive their paycheck in a checking account and then transfer money to Wise if they need it. Check with your employer's payroll system to see if Wise is an option.

What is the cheapest way to transfer money internationally?

Wise is usually cheaper than a bank wire, but the cost depends on the currency pair and the amount. For very small amounts, the fee may be a larger percentage of what you are sending. Compare Wise's fee to your bank's wire fee before you decide.