Tired of looking for a branch or navigating a clunky app when you need to manage your bank account?
For anyone who’s ready to walk away from traditional branch banks, an industry of online challenger banks has blown up over the past decade. Technology companies have swooped in to respond to the need for more mobility, better apps and lower fees.
Varo (previously Varo Money) and Chime each offer checking and savings accounts through user-friendly mobile apps and online banking. Here’s how we rated each company.
Chime and Varo offer most of the same account options aimed at simplifying banking and savings for anyone who’s ready to say goodbye to traditional banks.
|Small Business Banking||n/a||n/a|
|Fees||$2.50 + third-party fees for out-of-network ATMs; up to $5.95 retailer fee for over-the-counter deposit or withdrawal||$2.50 + third-party fees for out-of-network ATMs; up to $5.95 retailer fee for over-the-counter deposit; $2.50 + up to $5.95 retailer fee for over-the-counter withdrawal|
|Full Review||Varo Bank Review||Chime Bank Review|
Chime is the leader in online banking, offering a no-frills account with features meant to simplify your money management and help you reach savings goals.
Chime Features and Fees
Chime offers fee-free online spending and saving accounts. It includes built-in automatic saving features, SpotMe fee-free overdraft protection, access to two fee-free ATM networks and more.
Chime is known for fee-free services, so you won’t pay for much. You’ll just pay a $2.50 out-of-network ATM fee, plus any fee charged by the ATM operator. And you could pay up to $4.95 to withdraw or deposit cash through your debit card at a Green Dot retail location.
Chime Bank Review
Is Chime right for you? Read our full Chime review to learn more about its features and see what it has to offer.
As of July 2020, Varo is the first banking app to gain approval for a full bank charter in the U.S. That means it’s its own bank, unlike other banking apps, which provide technology and work with national banks to provide the financial services and accounts behind the scenes.
It hasn’t yet taken full advantage of its status to offer a full suite of financial services, but it does offer services beyond its original stripped-down checking and savings account, including a forthcoming credit builder program and small cash advance loans.
Varo Features and Fees
Varo offers an online, app-based checking and savings account with built-in automatic savings tools, optional overdraft protection called Varo Advance, access to a network of fee-free ATMs and more. It also offers cash advance loans and is developing a credit builder program called Varo Believe for qualifying customers.
Nearly all Varo features are fee free. You’ll just pay $2.50 to Varo to use an out-of-network ATM, plus third-party ATM fees. And you could pay a third-party fee up to $4.95 to the retailer if you deposit or withdraw cash over-the-counter at a Green Dot location. If you use Varo Advance, you’ll pay a fee between $0 and $5, depending on how much cash you draw.
Varo Bank Review
Is Varo a good bank? Read our full Varo review to learn more about its features and decide whether it’s a good fit for you.
Both accounts offer these features:
Fee-Free Checking and Savings Accounts
Both Chime and Varo include a debit account (a.k.a. checking) and optional savings account, both with no monthly fees.
Automatic Savings Tools
Both accounts include simple ways to automatically build your savings account by setting rules to move money from checking to savings when you get paid and when you shop.
Both savings accounts offer higher-than-average APY on your savings account balance.
Chime offers 0.50% APY on savings with no minimum balance requirement.
Varo offers 0.20% APY on savings to any customers, and you can earn 3.00% APY in a given month if you receive at least $1,000 in direct deposits, maintain a minimum balance of $5,000 and keep both of your accounts above a $0 balance during that month.
Early Direct Deposit
As with many online banks, both accounts make your paycheck available up to two days early if you get paid through direct deposit. The money is available in your account as soon as your employer processes payroll, which could be up to two days before the scheduled payday.
Through Chime’s SpotMe overdraft protection program, the company will spot you up to $20 with no fee as long as your account has at least $500 per month in direct deposits. That limit can go up to $200 based on your account activity.
Through Varo Advance, you can add instant overdraft protection through the app with a small cash advance loan of $20, $50, $75 or $100, for a fee of $0, $3, $4 or $5, respectively.
With both Varo and Chime, you can deposit money into your bank account at more than 60,000 retail locations with Green Dot, which is a function many online banks don’t allow.
With either account, you can pay bills through ACH transfer by giving companies your bank account and routing numbers, or mail a paper check.
Both companies provide FDIC-insured accounts up to $250,000 (the typical amount for any bank account). Chime partners with The Bancorp Bank and Stride Bank, N.A., and Varo Money is backed by its own Varo Bank.
Instant Money Transfer
With both Chime and Varo, you can send money instantly with no fees to others who use the same app. Varo Bank also works with Zelle for money transfers to folks who use other banks, though it admits the connection isn’t always reliable (and is working to fix that).
Neither company uses ChexSystems, which many traditional financial institutions use to determine your eligibility for a bank account, so a bad banking history won’t necessarily disqualify you for these accounts. Neither company checks your credit report for a banking account or credit builder card, either.
Free ATM Withdrawals
A Chime account gives you access to 38,000 fee-free ATMs in the United States through the MoneyPass and Visa Plus Alliance networks. Varo’s account connects you to more than 55,000 fee-free Allpoint ATMs in the U.S.
Live Customer Support
Talk to a real person from either company via chat in the app, email or on the phone seven days a week.
Reach Chime customer service via email at [email protected], or by phone at 844-244-6363 during business hours: Monday through Friday 6 a.m. to 10 p.m. Central, and Saturday and Sunday 7 a.m. to 9 p.m.
Reach Varo customer service via email at [email protected], or by phone at 800-827-6526 during call center hours: Monday through Friday 8 a.m. to 9 p.m. Eastern, and Saturday and Sunday 11 a.m. to 7 p.m.
Stay on top of your Varo account balance with optional notifications anytime money moves in or out of your account. Chime gives you the option to receive a push notification when a direct deposit hits.
Credit Building Programs
Both companies offer a new, secure way to build credit.
Chime’s Credit Builder Visa credit card is a secured credit card with no annual fee, no credit check to apply and no minimum required deposit (an unusual feature for a secured card). It works like a debit card that lets you build credit.
Through the program, Chime members can move money into their Credit Builder account to back the card, make purchases with the card and have the balance automatically paid off from their Credit Builder account. Chime reports activity to credit bureaus, so the card is a less risky way to build or rebuild your credit.
Varo’s forthcoming Varo Believe program is nearly identical, backing a secured credit card with a dedicated amount of your choice from your Varo Bank account.
What They Don’t Offer
Neither platform offers these features:
- Joint accounts or additional authorized debit card users.
- Other financial products, like personal loans, auto loans and mortgages.
- Small business banking services.
- Paper checks (though you can use bill pay to have the banks send checks for you,
Chime and Varo bank account features are nearly identical, with details that could sway you one way or the other.
Varo Bank Account: A
Chime Spending Account: A-
Both banks offer a fee-free checking account for deposits and spending. In both cases, you’ll automatically apply for this account when you set up your account in the app (or online). You can fund it through direct deposit or transferring money from an external bank account.
Both Chime and Varo eschew traditional banking fees, including monthly maintenance fees, minimum balance fees and overdraft fees.
Both accounts let you get your paycheck up to two days early compared with a traditional bank, because they release the funds as soon as your employer initiates the deposit.
Both accounts come with a Visa debit card you can use for transactions anywhere Visa is accepted, and for ATM withdrawals. Both are also connected to the Green Dot network, so you can deposit or withdraw cash at retail locations around the U.S.
Both Chime and Varo charge no overdraft fees and offer optional overdraft protection — but eligibility and details vary.
- Chime SpotMe: Chime will spot you for an overdraft up to $200 and take it out of your next deposit. To be eligible, you just have to receive $500 in direct deposits every month.
- Varo Advance: You can opt into overdraft protection as you need it with Varo Advance, a small paycheck advance you select instantly through the app. Choose an advance of $20, $50, $75 or $100, and pay a fee of $0, $3, $4 or $5, respectively. You’ll choose an automatic repayment date anytime between 15 and 30 days of the advance. To qualify, you have to have at least $1,000 in direct deposits within the past 31 days.
Varo Savings Account: A+
Chime Savings Account: B
Both Varo and Chime offer optional savings accounts that facilitate automatic savings and yield competitive interest rates.
Funding the Account
You can only fund a Chime Savings account by transferring money from your Chime Spending account — not through direct deposit or an external bank account. To add money from another source, you must first deposit it into your Spending account, then make an instant transfer.
You can deposit money into a Varo Savings account from your Varo Bank account in the app or directly from an external account through ACH transfer.
Savings Account Interest Rates
Both Chime and Varo savings yield interest at an annual percentage yield (APY) above the 0.06% national average for savings accounts reported by the FDIC.
Chime Savings offers a 0.50%% APY with no additional requirements.
Varo Savings offers a 0.20% APY with no requirements. You can earn up to 3.00% APY on balances up to $10,000 by receiving at least direct deposits of at least $1,000, maintaining a minimum $5,000 balance and keeping both your Bank and Savings accounts above $0 for the month.
Chime and Varo each let you select one or both of two savings “rules” that automatically move money into your savings account. Varo’s options are slightly broader than Chime’s.
- Chime: Save when you get paid by transferring 10% of any direct deposit of $500 or more into savings. Save when you spend by rounding up Chime debit card transactions to the nearest dollar and depositing the digital change into savings.
- Varo: Save Your Pay lets you set a percentage of your direct deposits to automatically transfer to savings. Save Your Change rounds up every transaction from your Varo Bank account — including debit card purchases, bill payments and transfers — to the next dollar and deposits the difference into your savings account.
All online-only banks are convenient relative to traditional branch banks, unless you prefer face-to-face service from bank tellers at a brick-and-mortar bank.
Each bank’s mobile app lets you manage your account 24/7, including mobile check deposit and money transfers, and live customer service agents are available if you need questions answered.
Varo and Chime accounts offer features many online banks don’t, including cash deposits via Green Dot, early paycheck access and flexible overdraft protection.
Varo App: A
Chime App: B
Chime and Varo both offer mobile banking apps that are more user-friendly and easier to navigate than what you’ll get for most traditional bank accounts. However, both are pretty simplistic, lacking the budgeting tools you’d find in a lot of mobile apps.
In both apps, you can:
- View and manage your accounts.
- Transfer money between savings and checking, to and from external accounts, and to other customers of the same bank.
- Deposit checks using your smartphone camera.
- Locate in-network ATMS.
- Freeze your debit cards.
- Manage overdraft protection.
- Contact customer support (via chat or email).
Both apps give you the option to stay on top of your bank account balance by receiving a push notification every time money moves in or out of your account — via deposit or withdrawal, debit card purchase, or over-the-counter or ATM cash withdrawal. Chime also sends daily account balance alerts.
Small Business Banking
Neither Varo nor Chime offer small business banking accounts or products and services.
Both companies tout fee-free banking that eliminates many of the costs associated with traditional banks — largely because they don’t bear the expense of running brick-and-mortar locations.
You’ll pay no maintenance fees, overdraft fees or foreign transaction fees, and you can avoid ATM fees by using in-network ATMs.
With both banks, you’ll just pay for:
Out-of-network ATM: $2.50 for using an out-of-network ATM, plus any fee the ATM owner charges.
Cash deposit: You’ll pay a retailer fee up to $5.95 to deposit cash via Green Dot.
OTC cash withdrawal: You’ll pay a retailer fee up to $5.95 for a cash withdrawal via Green Dot. Chime also charges a $2.50 fee for over-the-counter withdrawal, while Varo does not.
Varo Advance: You’ll pay between $0 and $5 to use overdraft protection with Varo, while Chime’s SpotMe overdraft protection is free.
Overall, Chime and Varo offer similar banking products that will likely appeal to the same types of banking customers — but each has slight differences that might appeal to certain customers.
Who Should Join Either Bank?
You might prefer either account over traditional banks if:
- You prefer the easy access and mobility of online banking.
- You regularly run your account balance close to $0 or live paycheck to paycheck.
- You’re often paid through direct deposit — you could benefit from an early payday!
- You’re often paid in cash but want an online bank account.
- You want an easy way to save money automatically.
- You want a flexible and secure way to build credit without the risk of accruing debt.
A traditional bank or credit union is probably a better fit if you want to manage your checking, savings, loans, credit cards and investment accounts all in one place.
Who Should Join Varo?
Varo is better than Chime if:
- You want to build an emergency fund. Varo’s Save Your Pay rule lets you set aside any percentage of your paychecks you want, so you can set it above Chime’s 10% Save When You Get Paid rule to help you reach your savings goals faster.
- You want to make the most of your savings. Varo offers six times Chime’s interest rate on savings for qualifying account holders, though the rate comes with balance requirements.
- You live in the Mountain states. Although services in general tend to be limited in this region, Allpoint’s ATM network has a little more coverage than both MoneyPass and Visa Plus Alliance in Montana, Idaho, Wyoming, Colorado, Utah and Nevada.
Who Should Join Chime?
Chime is better than Varo if:
- You run on a tight budget. Chime provides overdraft protection with just $500 in monthly direct deposits compared to Varo’s $1,000-deposit requirement. It covers you up to $200 compared to Varo’s $100 and doesn’t charge a fee for the service.
Are Chime and Varo the same?
Chime and Varo are distinct companies operating online banking apps, but they each offer similar services.
Is Varo Bank a good bank?
Varo Money is a reputable and popular banking app backed by FDIC-insured accounts through Varo Bank. The mobile bank is a good option for anyone who likes online banking and has simple banking needs that don’t require all financial services to live under one roof.
Is Varo an actual bank?
Yes, Varo Bank, N.A. received approval for a U.S. bank charter in July 2020 and is an FDIC member. Varo Bank is a wholly-owned subsidiary of the financial technology company Varo Money, Inc., which operates the Varo Money banking app.
Which bank is better: Current or Chime?
Current is an online bank account that offers many of the same features as Chime and other neo bank competitors. Current stands out for offering “savings pods,” which help you save toward specific goals, and separate accounts for teens; but it charges fees to access those unique features.
Neither account requires a minimum opening deposit, but you can connect an external bank account to transfer money in right away or set up direct deposit to fund your account when you get paid.
The Penny Hoarder’s editorial team considers more than 25 factors in its bank account reviews, including fees, minimum daily balance requirements, APYs, overdraft charges, ATM access, number of physical locations, customer service support access and mobile features.
To determine how we weigh each factor, The Penny Hoarder surveyed 1,500 people to find out what banking features matter most to you.
For example, we give top grades to banks that have low fees because our survey showed that this is the No. 1 thing you look for in a bank. Because more than 70% of you said you visited a physical bank branch last year, we consider the number of brick-and-mortar locations. But more than one-third of you use mobile apps for more than 75% of your banking, so digital features are also considered carefully.
Ratings are assigned across the following categories:
- Personal checking accounts
- Personal savings accounts
- Small-business banking
- Mobile banking
Credit card and loan products are not currently considered.
Dana Sitar (@danasitar) has been writing and editing since 2011, covering personal finance, careers and digital media.
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