Varo vs. Chime: Which Online Bank is Better?

Banking
Updated: 13th Jul 2021
Written by Jordan Blansit
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Banking
July 13, 2021
Written by Jordan Blansit

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Neobanks are the latest rage in an increasingly online world. These low- to no-fee online banks cut through the frills offered by larger institutions to bring you pared-down products and 24/7 mobile access.

In other words, with banks such as Varo and Chime, you’re getting just the essentials – which for many, is a relief in such complicated times.

But of course, we have to ask: when it comes to Varo vs. Chime, which online bank is better?

Snapshot: Chime Pros and Cons

Pros:

  • No monthly or overdraft fees
  • Over 38,000 fee-free ATMs
  • Built-in automatic savings features
  • High-yield savings accounts
  • Early paycheck access with direct deposit
  • Credit builder card

Cons:

  • No physical branches
  • No easy cash deposit options
  • Customer service can be lackluster

Chime Overview

Chime is a Bay Area fintech (financial technology) company and digital first bank. The firm partners with The Bancorp Bank and Stride Bank to offer banking services such as FDIC-insured checking and savings accounts, secured credit cards, and other financial products.

All of Chime’s services come at low to no fees, thanks largely to their online-only financial experience.

By going digital first, Chime is able to cut through red tape and excessive fees on the consumer end.

While this means they have no physical location to speak of, their top-notch mobile app and web portal provide all the access you’ll ever need.

Chime Main Features and Benefits

Checking Account

Chime offers a fee-free, no minimum required checking account with features such as overdraft protection, early direct deposit, online bill pay, and mobile check deposit.

Spot Me

We mentioned overdraft protection, and here it is: Chime’s SpotMe program. This feature lets you overdraft your account between $20 and $200 at no extra cost. All you need to qualify is a monthly direct deposit of $500 or more!

Savings Account

With Chime’s savings account, you can earn an industry-beating 0.50% APY interest rate with no minimum balance.

But Chime’s savings account does come with one annoying feature: no direct-to-savings deposits or transfers. Instead, you deposit money in your checking account, then divert it to savings.

Automated Savings Feature

One of Chime’s better savings features is their automated savings options.

For instance, every purchase you make with your Chime Visa card automatically rounds up to the nearest dollar and deposits the change into your savings accounts.

Plus, you can automatically deduct a set amount from each direct deposit straight into your savings!

Chime Credit Builder Card

Chime also offers one of the newest (and least expensive) credit-building cards on the market: the Chime Credit Builder Visa® Secured Credit Card.

This card requires no credit check and charges no annual fees or interest.

No Credit Check

Chime requires no credit check to open a checking or savings account, or even apply for the Credit Builder Visa® Secured Credit Card.

Low to No Fees

Thanks to their low-overhead model, Chime charges no fees of any kind (except at ATMs outside their fee-free network).

That means no fees for:

  • Monthly maintenance
  • Overdrafts
  • Foreign transactions
  • Standard transactions
  • Hidden costs
  • Or anything else!

ATM Access

Chime partners with Visa MoneyPass and Visa Plus Alliance to bring you fee-free access to over 68,000 ATMs.

And if you can’t find an ATM in their network, you’ll run into the only fee Chime charges: $2.50 per withdrawal.

Awesome Mobile Experience

Chime’s sleek mobile app provides flawless access to your account. It supports Apple, Google, and Samsung Pay for transactions on the go. Plus, you can manage your account end to end!

Customer Service

Chime doesn’t offer in-person services – but it does employ a team of support staff that you can reach via email or phone 7am-7pm Monday-Friday or 9am-5pm Sunday.

Read Our Full Chime Review

Snapshot: Varo Pros and Cons

Pros:

  • No monthly fees or minimum balance requirements
  • 0.20% to 3.00% savings APY
  • No overdraft fees
  • Up to $100 in instant cash loans (for a $0 to $5 fee)
  • Access to fee-free Allpoint ATM network

Cons:

  • No brick-and-mortar branches
  • Cash deposits only available via third-party retailers
  • 24/7 customer service not available
  • More fees than Chime

Varo Overview

Varo Bank is another neobank that offers essential banking services on a fee-free model. Just like Chime, the bulk of your banking experience takes place in their highly rated iOS or Android mobile app.

And all checking accounts come with a chip-enabled Visa debit card that you can add to Apple, Samsung, or Google Pay for eligible transactions.

However, Varo has one significant difference from Chime: it’s the first “mobile-centric bank in U.S. history” to receive a national charter – meaning that instead of shuffling your funds off to an FDIC-insured bank, they hold and insure their own deposits.

Additionally, Varo offers one of the highest savings accounts APYs available at 3.00%, so long as you meet a few criteria:

  • A daily savings balance between $0 and $5,000 for the entire month
  • At least $1,000 per month from qualifying direct deposits
  • At least 5 eligible debit card purchases per month

Varo Main Features and Benefits

Great Mobile Banking

Signing up for Varo Bank is easy – just download the app and follow the prompts. Almost everything takes place in the app, including:

  • Adding and transferring funds
  • Paying bills and peer-to-peer transactions
  • Setting up and managing direct deposits
  • Budgeting and spending tracking

That said, if you need to contact customer service same day, you’ll have to make a phone call. (Shudders.)

Checking Account

Varo Bank offers the Varo Bank Account, their answer to traditional checking accounts. It comes with no monthly fees or minimum balance requirements – plus, you can access your direct deposit funds up to two days early!

No Minimum Balance

Just like it says!

No Credit Check

No traditional credit card, no credit check. It’s that simple! And that even applies to the firm’s upcoming Varo Believe Program, Varo’s secured credit card, because you can’t spend more than you’ve deposited.

No Overdraft or Monthly Fees

For those worried about hefty overdraft fees, don’t worry – you can’t overdraft your account unless you’re signed up for Varo Bank’s No Fee Overdraft program.

This initiative lets you overdraw by up to $50 with no fees or interest, so long as you:

  • Enroll via the Varo App
  • Receive at least $1,000 in monthly qualifying direct deposits
  • Make five debit purchases per month

Customer Service

Varo Bank offers phone support Monday through Friday 8am to 9pm Eastern time, and 11am to 7pm on weekend. They also operate email and Twitter support that you can contact at any time.

Read Our Full Varo Bank Review

Chime vs. Varo Bank Similarities

When it comes to Varo vs. Chime, the banks share a surprising number of similarities.

For instance, both banks operate fully online, with the exception of phone-based customer service. Neither invests in brick-and-mortar branches or services of any kind.

Additionally, both Varo and Chime operate as Second Chance banks. In fact, they opt out of ChexSystems completely, so you can’t be denied based on past mistakes such as repeated overdrafts or unpaid fees.

They can afford to do this thanks to fee-free experience built on low overhead and responsible banking habits. After all, it’s difficult to overdraft an account that doesn’t allow it.

But these aren’t the only similarities that Chime and Varo share.

Overdraft Protection

Chime and Varo both offer optional overdraft protection programs. Chime SpotMe lets you overdraw between $20 and $200, while Varo’s No Fee Overdraft allows an overdraft up to $50.

Fee-Free Banking Experience

Just like it says – both banks offer fee-free banking experiences, with limited exceptions such as out-of-network ATMs and Varo’s instant loan program, Varo Advance.

Fee-Free ATM Access

Speaking of ATMs! Varo’s Allpoint ATM network contains more than 55,000 fee-free ATMs, while Chime Bank participates in two Visa ATM program to the tune of over 68,000 machines. That’s a lot of free withdrawals.

Direct Deposit – with Early Payments!

With either bank, you can sign up for free direct deposit in the app. And if your government benefits or employer payroll is eligible, you can access your funds up to two full days early.

Bill Pay

You’d think that free online bill pay would be a staple by now – but for some banks, it’s anything but.

That’s not true with Chime or Varo; just log in, provide the required information, and you’re good to go!

High-Yield Savings

Chime savings accounts come with a higher-than-average 0.50% APY with no monthly fees. Varo’s standard 0.20% seems like piddly beans by comparison – but if you meet the basic requirements, you can earn an eyewatering 3.00% APY on up to $5,000.

No Joint Accounts or Authorized Users

Unfortunately, neither Chime nor Varo offer any kind of joint accounts or authorized users. And since you have to be at least 18 to sign up, that means that these neobanks won’t work for families who want to introduce their kids to the wondrous world of banking.

No Loans

Additionally, Chime and Varo are committed to their no-frills, low-fee approach – which means neither institution offers any kind of loans, either.

That cuts out personal loans, auto loans, and mortgages. (Though they both offer secured credit cards.)

No Small Business Banking

Moreover, these neobanks focus on personal banking products, rather than institutional products. As such, they don’t offer banking tools or special offers for small businesses looking for low-fee alternatives.

Chime vs. Varo Frequently Asked Questions

Does Varo or Chime Offer Small Business Banking Solutions?

Nope! Neither online bank offers accounts geared toward small businesses. But if you’re in the market for business banking, check out BlueVine or Novo Bank.

Who is Chime Best for?

Chime is a no-frills bank that provides a competitive interest rate, excellent overdraft protection with a minimum $500 monthly direct deposit, and automated savings options.

If you’re in the market for essential banking services at no extra cost, Chime might suit you well.

Who is Varo Best for?

Varo Bank is ideal for mobile-centric customers who need basic banking services or want to earn a high APY on their active account.

But keep in mind that you must maintain the eligibility requirements to earn the best interest rates!

Is Chime or Varo Better for Teenagers?

Neither! Unfortunately, both accounts require members to be 18+ to join, and neither offers joint accounts or authorized users. If you’re in the market for a family-friendly financial firm, Current Bank is a better option.

Do Chime or Vary Have Any Retail Bank Locations?

Nope! Both banks are 100% online only.

Is Chime or Varo a Better Bank?

Chime and Varo offer similar services that benefit overlapping populations. Both banks include products such as:

  • Free checking and savings accounts
  • No monthly, overdraft, or minimum balance fees
  • Easy-to-use mobile apps
  • Overdraft protections
  • Competitive high-yield savings accounts

But those last two points differ slightly between these neobanks. Whereas Chime allows up to $200 in overdraft with $500 in monthly direct deposits to qualify, Varo lets you overdraft your account up to $50 with monthly direct deposits of $1,000.

Moreover, Chime’s savings accounts come at a very competitive 0.50% APY, while Varo starts at 0.20%. But at Varo, you can earn up to 3.00% APY if you meet a few basic requirements.

Between the two, Chime may be the better option if you need a no-frills account with no qualifying features to access the best products.

But if you bring in more income via direct deposit and plan to use your account actively, Varo’s 3% APY is difficult to beat.

Bottom Line: Chime vs. Varo

Online-only banks are the latest wave of fintech innovation that slash fees and promote consumer benefits.

While many challenger banks – Chime and Varo included – pare down products such as retirement or investment accounts, they do offer high-yield savings accounts, fee-free services, and 24/7 mobile access in return.

Jordan Blansit
Jordan Blansit
Jordan is a freelance writer with an inexplicable predilection for investing and personal finance. When she’s not click-clacketing from the comfort of her living room, you can find her (or not) craftily avoiding human contact in the California redwoods or Oregon Siskiyous with her black cat, Bean.