Chime Review: Simple and Free, But Low Interest Rates

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Key Takeaways

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• Chime is a financial technology company that offers fee-free online banking services through partnerships with Bancorp Bank and Stride Bank.

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Some links on our website are sponsored, and we may earn money when you make a purchase or sign-up after clicking. Learn more about how we make money and read our review methodology.

Chime is a financial technology company that offers fee-free online banking services through partnerships with Bancorp Bank and Stride Bank. This review will explore Chime’s account types and features, and will explain who it is and isn’t best for.

4.5/5

Chime offers a competitive online banking service suite that caters to people looking for a fee-free, mobile-first banking experience. With no monthly fees or minimum balance requirements, and innovative features like SpotMe and Credit Builder, Chime is an attractive option for those seeking to avoid traditional banking fees and build their credit. However, it’s not well suited for those who require physical branches, joint accounts, a high interest rate, or the need to rebuild their credit significantly.

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Table of Contents

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• Chime Bank at a Glance
• 3 Things We Like Most About Chime
• Drawbacks of Chime
• Chime Alternatives
  • Most Similar to Chime: Varo Bank
  • Credit Builder Alternative: Cred.ai
• How It Works: Chime High-Yield Savings Account
• Overview of Chime Credit Builder
• Chime Bank FAQ

Chime Bank at a Glance

Chime is not a bank. It’s a fintech company that partners with Bancorp Bank and Stride Bank (both of which are FDIC-insured) to offer four different banking services.

• Checking. Chime’s checking account has no monthly fees, minimum balance requirements or overdraft fees. It also allows you to access your paycheck up to two days early when you opt into direct deposit.
• SpotMe. Chime’s SpotMe feature offers a very user-friendly approach to overdraft protection. By enrolling in SpotMe, which is optional, you can make debit card purchases and ATM withdrawals that exceed your account balance up to a certain limit, with a maximum of $200. Unlike numerous traditional banks that allow transactions to process and charge a hefty fee and a high interest rate for overdrafts, Chime simply declines any transactions exceeding your SpotMe limit.
• Savings. Chime offers an optional automatic savings tool that rounds up your debit card transactions to the nearest dollar and transfers the difference to a savings account. Additionally, it offers a feature called “Save When I Get Paid,” which automatically sets aside a portion of each paycheck. The account pays 2% interest.
• Credit Builder. Chime’s Credit Builder account is a secured credit card designed to help you build or improve your credit score. This account has no annual fees, requires no credit check, and allows you to set your credit limit based on the amount deposited.

3 Things We Like Most About Chime

• Automatic savings feature. Chime’s automated saving tool , which rounds up transactions and transfers the difference to your savings account , provides a seamless way to save. While other banks and fintech companies offer similar features, they frequently come with a monthly fee for these services. With Chime, this tool is free. 
• Fee-free overdrafts with SpotMe. Chime’s SpotMe feature offers a fee-free overdraft buffer of up to $200. This loan is interest and fee-free, although there’s an optional tip upon repaying. This benefits those who find themselves paying overdraft fees, as well as those who feel the need to utilize payday loans or cash advance apps. Chime determines your SpotMe limit based on various factors, including the history of any Chime-branded accounts you have and your direct deposit history. The minimum is $20, and the maximum is $200. 
• Credit Builder card. With no interest, annual fees and no credit check requirements, Chime’s Credit Builder card lets you you improve your credit scores by reporting on-time payments to major credit bureaus. Most competitors in this space have monthly or annual fees.

Drawbacks of Chime

• No physical branches. Chime’s digital-only nature may not suit you if you prefer in-person banking or require traditional checkbooks. Although a check mailing service is provided, it may be less convenient than writing a check.
• Limited cash deposit options. Cash deposits with Chime are restricted to Green Dot locations, which frequently charge fees of up to $4.95 per transaction.
• Non-interest-bearing checking account. Numerous traditional and online banks offer interest-bearing checking accounts, allowing you to earn returns while maintaining simple access to your money.
• No joint accounts or multiple savings accounts. Chime lacks options for joint accounts and opening multiple savings accounts, which may limit you if you wish to manage household finances collectively or maintain separate savings accounts for different financial goals.
• No rewards. Chime debit card purchases do not offer cash-back or rewards. 
• Eligibility for SpotMe and Credit Builder. You may be excluded or limited from Chime’s SpotMe and Credit Builder features due to eligibility requirements. While every account holder receives a minimum of $20 in SpotMe overdraft protection, Chime considers other variables , mainly your direct deposit history , to increase that limit. 
• For Credit Builder, you must have a Chime Spending Account and receive a qualifying direct deposit of $200 or more into this account within the last 365 days before your application.

Chime Alternatives

The alternatives to Chime depend on your goals. Below we highlight a few alternatives based on features that may interest you. 

Most Similar to Chime: Varo Bank

Varo is an online banking platform that provides fee-free checking and savings accounts. Its savings account offers an interest rate of up to 5% APY on deposits up to $5,000 and 3% on everything else. 

Other Varo banking products include:

• Varo Advance. Similar to Chime’s SpotMe, Varo Advance offers up to $250 through a cash advance loan. But unlike Chime, which is free, there’s a flat fee for this advance.
• Varo Believe Card. A credit-building card designed to help shoppers improve their credit scores.

Like Chime, to qualify for the Varo Believe debit card, you need a funded Varo Bank Account without an overdue Varo Advance and at least $500 in qualifying direct deposits.

Overall, Varo and Chime are quite alike. Varo is a better fit for those seeking a higher savings interest rate. Chime’s primary advantage is the $200 SpotMe feature, which comes with no APR or fees for qualified depositors. 

Credit Builder Alternative: Cred.ai

The Final Thoughts

Before you check out, double-check chime review simple free against current offers and any coupons you can stack. Small habits like this add up to real savings over a year.

Originally published at thewaystowealth.com.