Varo vs. Chime: Which One Is Right for You?
Varo and Chime are both online-only banks that offer no-fee checking and savings accounts. Which one is right for you?

Online-only banks are the future of banking. Once you sign up for an account, you can do everything you would do at a brick-and-mortar bank. Except you don’t have to drive to a branch location or deal with expensive fees.

woman on mobile

But once you’ve decided to switch to online-only banking, how do you know what bank is the right choice for you? This really depends on your personal preferences and what you’re looking for in a bank. This article will compare two popular choices — Varo and Chime.

Varo vs. Chime: Features & Benefits

 VaroChime
CheckingFree checking with no minimum balance requirementsFree checking with no minimum balance requirements
SavingsTransfer funds from Varo checking or an external ACH transferYou can only transfer money to a savings account from Chime checking — external transfers aren’t allowed
Fees$2.50 out-of-network ATM fee and there’s also a fee for over-the-counter withdrawals$2.50 out-of-network ATM fee and there’s also a fee for over-the-counter withdrawals
Digital ExperienceOffers mobile and online banking access to manage accounts and deposit checksOffers mobile and online banking access to manage accounts and deposit checks
Banking ExperienceA convenient online-only bank, provides live customer service agents if you have questionsA convenient online-only bank, provides live customer service agents if you have questions

Chime Overview

Chime’s digital banking services include a checking account and savings account. It’s easy to open a bank account and get started, and you won’t get stuck with any of the fees most banks charge. And Chime accounts are FDIC-insured for up to $250,000 so you’ll know your money is safe. 

Main Features

  • Checking account: There are no minimum balance requirements to open a checking account with Chime. Once your account is set up, you’ll receive a free Visa debit card. The account doesn’t come with paper checks but you can use the app to send money to people and pay your bills.
  • Savings account: This free account comes with a generous 0.50% APY, which is a very competitive rate.
  • Automated savings option: Every time you make a purchase with your Chime Visa card, your purchase will automatically be rounded up to the nearest dollar. This money will then automatically be deposited into your savings account. This could be a good way to slowly start saving money.
  • Mobile support: The Chime mobile app is available for Android and iOS devices. You can use the app to manage your accounts, deposit checks, and transfer funds.
  • Customer service: Customer support is available by phone, email, or through the Chime app.
  • ATM access: Chime provides access to over 38,000 fee-free ATMs through its ATM network. If you use an out-of-network ATM you’ll be charged $2.50 plus any third-party provider fees.

Pros

Here are some of the advantages of opening a Chime account:

  • No monthly maintenance fees
  • No overdraft fees
  • No ACH bank transfer fees
  • No foreign transaction fees
  • No in-network ATM fees
  • Early payday option – Get paid up to two days early with direct deposits.
  • Deposit cash via Green Dot

Cons

Here are some of the disadvantages of banking with Chime:

  • No interest earned on checking
  • No small business banking
  • No budgeting tools
  • No joint accounts

Read the Full Review: Chime Banking: Mobile Banking Without the Fees

Varo Overview

Varo was founded in 2015 and has become a popular option for online-only banking. You can open a free bank account through Varo and take advantage of its free ATM network. And Varo offers a tiered rate for its high-yield savings account.

Main Features

  • Checking account: Varo’s checking account doesn’t come with any monthly maintenance fees, overdraft fees, or minimum balance fees. If you set up the No Fee Overdraft Service, you can overdraw your account by up to $50 without any fees or interest if you pay it back within 30 days.
  • Savings account: Varo’s free savings account comes with an incredibly generous 0.40% APY. However, you could earn up to 2.80% APY by meeting certain requirements.
  • Mobile banking: Varo offers a free mobile banking app that comes with a mobile check deposit feature. You can also use it to monitor your accounts. There’s also an “offers” tab that will help you find deals from Varo’s partners.
  • Customer service: Varo offers customer service by phone or email.
  • Account fees: The only fee Varo charges is a $2.50 fee for using an out-of-network ATM. You’ll also have to pay a $5.95 fee for over-the-counter deposits or withdrawals.

Pros

Here are some of the advantages of opening a Vero account:

  • No monthly maintenance fees
  • No overdraft fees
  • No ACH bank transfer fees
  • No foreign transaction fees
  • No in-network ATM fees
  • Generous APY on savings
  • Early direct deposit

Cons

Here are some of the disadvantages of banking with Vero:

  • Limits on cash deposits
  • No small business banking options
  • There are out-of-network ATM fees

Varo vs. Chime: What’s the Better Option?

In many ways, Varo and Chime offer features and benefits that are quite similar so you can’t really go wrong either way. Both banks offer free checking and savings accounts. And neither charges any monthly maintenance fees, overdraft fees, or minimum balance fees.

And both accounts come with some form of overdraft protection. With Chime, you can overdraw your account by up to $100 and take the funds from your next paycheck. However, you must have monthly direct deposits of at least $500 to qualify.

Varo also offers overdraft protection to its customers. You can overdraw your account by up to $50, but you have to set up monthly direct deposits of at least $1,000 to qualify. So Chime offers more generous terms in this situation.

Chime and Varo both offer competitive savings accounts with automatic savings features. With Chime, you’ll receive a 0.50% APY. However, Varo offers a tiered interest rate that starts at 0.40% APY. And you could earn up to 2.80% APY by meeting the following requirements:

  • Maintain a balance of up to $10,000
  • Make at least five debit card purchases per month
  • Monthly direct deposits of at least $1,000

And both banks provide a mobile app that you’ll use to manage your bank account, transfer funds, and deposit checks. However, Chime provides customer service through its app while Varo doesn’t offer this option.

Bottom Line

Online-only banks offer a number of benefits that you won’t get at traditional banks. You won’t have to pay any expensive fees and if you sign up for a high-yield savings account, you could earn substantially more in interest payments.

However, it’s important to think about your lifestyle and what you need from a bank. For instance, if ATM access is important to you then you’ll want to find out if the bank’s ATM network has locations that are convenient for you. Otherwise, you might find yourself getting stuck paying a lot of out-of-network fees.

You can get started with either Chime or Varo by visiting the bank’s website or by downloading the mobile app. From there, you can open your account and transfer over funds or set up a direct deposit.

See also: 6 Free Online Checking Accounts: No Opening Deposit Required


Source: crediful.com