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.
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.
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 many 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 often 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 helps 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 often charge fees of up to $4.95 per transaction.
- Non-interest-bearing checking account. Many traditional and online banks offer interest-bearing checking accounts, allowing you to earn returns while maintaining easy 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 customers 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 cred.ai card is an alternative to Chime’s Credit Builder card for individuals looking to build their credit.
The cred.ai card isn’t a traditional secured card but acts more like a debit card, which allows you to build credit. You’re limited to how much you can spend on the card by how much you carry in your cred.ai checking account. Any transactions over that amount will get declined.
Once you make a transaction on your cred.ai card, your associated cred.ai checking account pays down the balance.
On your credit report, the cred.ai card appears as an unsecured line of credit. It reports both on-time payments and credit utilization, allowing for a greater positive impact on your credit score to all three major credit bureaus, while Chime reports just payments and not credit utilization history.
If your priority is to increase your credit score, cred.ai will likely help more, as it reports both on-time payments and your credit utilization.
If you’re looking for an all-in-one banking solution where you can start to build credit slowly for and not have separate accounts, Chime is the better choice.
Learn more in our cred.ai review.
How It Works: Chime High-Yield Savings Account
Chime offers a high-yield savings account with a 2% APY, which is above the national average, although there are accounts paying higher rates.
Two automatic savings features that Chime provides are:
- Round Ups.
- Save When I Get Paid.
For example, if you purchase a coffee for $3.50, Round Ups would round the transaction up to $4 and transfer the 50 cents difference to your savings account. The purchase must be made with your Chime debit card.
If you receive a direct deposit of $500 or more and are enrolled in Save When I Get Paid, Chime will automatically transfer 10% to your savings account. Unfortunately, this amount can’t be customized — it’s a flat 10% for all users.
Many apps, like Acorns, offer advanced round-up and automatic savings features, including the ability to invest funds or save specific amounts like 20% of your income. However, these services do come with monthly fees.
Verdict: Chime’s high-yield savings account is a good option for those looking to build their savings with the help of automatic features. However, other options may be more suitable for individuals seeking the highest possible interest rate to park a large emergency fund.
Overview of Chime Credit Builder
Chime’s Credit Builder card is a secured credit card designed to help users build credit without annual fees, interest, or large security deposits.
All you need is a Chime checking account and qualifying direct deposits of $200 or more to apply. There is no credit check required.
Key features of the Chime Credit Builder card include its compatibility with the Chime Checking Account, allowing users to move money instantly between accounts.
Chime charges no fees for using the card, including no application fee, annual fee, interest, or card replacement fees. Similar to the Chime debit card, out-of-network ATM fees may apply.
The card is designed to help improve credit scores by reporting payment history to the major credit bureaus (TransUnion, Experian and Equifax).
Unlike traditional credit cards, it has no pre-set credit limit; the money moved into the secured account sets the spending limit.
While this prevents high utilization records on your credit history, it also means that Chime doesn’t report credit utilization rate, a factor that could potentially improve your score.
The Chime Credit Builder card can be used anywhere Visa credit cards are accepted, but funds can only be moved from a Chime Checking Account to the secured account. Transfers between accounts are almost instantaneous.
The card does not have overdraft services.
Verdict: The Chime Credit Builder card is a sold starter card for those looking to add payment history to their credit report. Because it doesn’t report credit utilization, there’s a limit to how much it will improve your score overall. So, it’s more of a good building block to build long-term credit rather than meant for someone looking for a credit fix.
Chime Bank FAQ
Chime provides customer support through phone, email, and in-app chat channels.
Chime does not offer traditional checkbooks but provides a check mailing service. Users can request that Chime send a paper check to a designated recipient through the Chime app. Of course, you can purchase your own checks online using your Chime account and routing number.
Cash deposits to Chime accounts can be made at Green Dot locations. However, these transactions frequently incur fees of up to $4.95.
Chime services are currently limited to residents of the United States and are not available for non-U.S. residents or in countries outside the United States.
The Chime Visa Debit Card is accepted for international transactions. However, Chime levies a 3% foreign transaction fee on purchases outside the United States.
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