Wise.com Paying 1.79% via "Cashback"

PIC16f84 said:

I have serious doubts anyway with wise and Interactive Brokers, I wouldn´t call them "deposits" as people may think they are under deposit guarantee schemes when they are not. Perhaps they should have their own thread/section on the best buys, something like "brokers that pay interests" to avoid confusion. Personally I´m not putting any of my saving on them as I´m only looking at deposits and current accounts that pay interests, both of which are covered under deposits guarantees schemes. Lightyear (up to 20k) and Trade Republic (up to 100k,50k paying interest) clearly advertise their protection/guarantees, the others don't

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The lines are blurred between brokers and banks. There is also a bit of confusion on the 3 different types of insurance.

Deposit insurance can come via:
- 100k via a Deposit Protection Schemes (Mainly banks but also some brokers such as Trade Republic)
- 100% of the first 20k via Investor Protection Schemes in most European countries (for example, with Lightyear and Wise.com)
- 90% of the first 20k via Investor Protection Scheme if the Irish Investor Protection Scheme is followed (for example, with Interactive Brokers).

In addition, brokers keep client money segregated and do not invest it. Banks do invest it / lend it out.

I will see what I can do to make the insurance point clearer.

Wise.com terms say:
"the Belgian Deposit Guarantee Scheme does not apply to your Wise Account"

The Instant Access thread should probably be corrected for this.

Gregor1 said:

Wise.com terms say:
"the Belgian Deposit Guarantee Scheme does not apply to your Wise Account"

The Instant Access thread should probably be corrected for this.

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Updated. Thanks.

Lightning said:

It's really strange that Wise.com call this "cashback" rather than interest.

Moving money into USD leads to FX risk. Generally speaking you should keep your deposits in the currency that you intend to spend the deposits in.

Deposit interest tax is withheld in Belgium (unless you complete a form) but you still need to declare the interest to the Revenue less any tax already paid in Belgium.

The Wise.com rate is good relatively speaking but obviously Trade Republic, Bunq, Raisin and Go-Lightyear offer better rates.

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I'm guessing this is a deliberate ploy by Wise. The idea of a cashback isnt new, and as far as i'm aware, Revenue don't go looking for a cut of that when you get it for switching utilities.

I'm thinking Wise are offering effectively the net of tax rate (or close enough to it) to attract people thinking they don't need to declare it for DIRT/tax purposes. Really would come down to how revenue deem it, and could have wider implications if Revenue look for a taxable share.

daheff said:

I'm guessing this is a deliberate ploy by Wise. The idea of a cashback isnt new, and as far as i'm aware, Revenue don't go looking for a cut of that when you get it for switching utilities.

I'm thinking Wise are offering effectively the net of tax rate (or close enough to it) to attract people thinking they don't need to declare it for DIRT/tax purposes. Really would come down to how revenue deem it, and could have wider implications if Revenue look for a taxable share.

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It's nothing as sophisticated as that.
Thet can't call it interest, because its not a deposit! The product is not capital guaranteed.

They are based in Belgium, and its subject to Belgian withholding tax. They haven't even attempted to get exemption for non residents, so there's no chance this is to try get around Irish Tax rules.