Varo vs. Chime: Which One Is Better?

Banking

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 monthly fees.

woman on mobile

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

Varo vs. Chime: Features & Benefits

VaroChime
CheckingFree checking account with no minimum balance requirementsFree checking account with no minimum balance requirements
SavingsTransfer funds from Varo checking account or an external ACH transfer to savings accountYou can only transfer money to a savings account from Chime checking account – 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

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Overview
  • No monthly service fees, foreign transaction fees, or transfer fees
  • No minimum opening deposit or balance requirements
  • Use your Chime Visa Debit Card at 60,000 fee-free1 ATMs
  • Get paid up to 2 days early2
  • Chime Savings Account offers 1.50%3 APY and its Automatic Savings feature helps you save money with every paycheck

Chime offers a mobile banking option that is easy to use and comes with plenty of benefits. When you sign up for direct deposit, Chime makes your paycheck available to you as soon as your employer deposits it, and that’s often two days earlier.

Setting up direct deposits is easy. When you open your account, you’ll receive a pre-filled direct deposit form through email. You can give that form to your employer and get started right away.

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 monthly fees most banks charge. And Chime works with The Bancorp Bank and Stride Bank, N.A., Members FDIC, so accounts are FDIC-insured for up to $250,000 and your money is safe.

Main Features

  • Checking account: There are no minimum balance requirements to open a Chime Spending Account. Once your account is set up, you’ll receive a free Visa debit card. This checking 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 1.50%3 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.
  • Credit builder card: The Chime Credit Builder Secured Visa® Credit Card offers a completely new way to build credit. There is no minimum security deposits, no annual fee, and no interest charges. There is also no credit check to open a credit builder account. Use your card for everyday purchases and Chime will report your on-time payment history to all 3 credit bureaus to help you build credit over time.
  • Mobile support: The Chime mobile app is available for Android and iOS devices. You can use the app to manage your savings and checking 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 60,000 fee-free2 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 through Chime:

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

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

Varo

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Overview
  • No monthly service fee
  • Manage your money through your iOS or Android device
  • 55,000 fee-free Allpoint ATMs
  • No foreign transaction, debit card replacement, or transfer fees
  • Pay no overdraft fees with Varo Advance

Varo was founded in 2015 as a digital bank and offers online bank and checking accounts without monthly fees. You can sign up for a Varo bank account completely online, and there’s no need to go into a regional branch.

In addition, you can get early direct deposit and receive your paycheck up to two days early with this account. Varo can even help you to get your tax refund up to two days early.

Varo Overview

Varo Bank is an online bank founded in 2015. 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. It has become one of the most popular options for online-only banking.

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: The Varo savings account is free and it comes with a generous 0.40% APY. However, you could earn up to 2.80% APY by meeting certain requirements.
  • Mobile banking: Varo Bank 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 Varo 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 account
  • Early direct deposit

Cons

Here are some of the disadvantages of banking with Varo:

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

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

Varo and Chime offer features and benefits that are quite similar in many ways, so you can’t really go wrong either way. For example, both options 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 $200 and take the funds from your next paycheck. However, you must have monthly direct deposits of at least $500 to qualify.

Varo Bank 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 1.50%3 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 companies 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 banks offer several benefits that you won’t get at traditional banks. You won’t have to pay any expensive hidden 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, you’ll want to find out if the bank’s ATM network has convenient locations 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 their websites or downloading their mobile app. From there, you can open your account and transfer over funds or set up a direct deposit.

1. Out-of-network ATM withdrawal fees may apply with Chime except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.

2. Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. Chime generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.

3. The Annual Percentage Yield (“APY”) for the Chime Savings Account is variable and may change at any time. The disclosed APY is effective as of August 25, 2022. No minimum balance required. Must have $0.01 in savings to earn interest.

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

Jamie Johnson
Meet the author

Jamie Johnson is a freelance writer who has been featured in publications like InvestorPlace and GOBankingRates. She writes about various personal finance topics including student loans, credit cards, investing, building credit, and more.