Varo vs. Chime: Which Online Bank Is Right for You?
Best for Making the Most of Savings
- Up to 5% APY savings
Best for Customers on Tight Budgets
- Automatic saving tools
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 the companies stack up.
Varo vs. Chime at a Glance
- Fee-free checking and savings
- SpotMe® fee-free overdraft protection
- Interest-free credit builder card
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 fee1, 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.
- Fee-free checking and savings
- Low-cost cash advance
- Up to 5% APY on savings
Varo was 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 credit builder program and small cash advance loans.
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.
When you open a Varo savings account, you’ll start with a 3% APY, and you can earn up to 5% on savings balances up to $5,000 as long as you receive at least $1,000 in direct deposits each month and keep both of your accounts above a $0 balance during that month.
Varo vs. Chime: Details
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.
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 2.00% APY2 on savings with no minimum balance requirement.
Varo offers 3.00% APY on savings to any customers, and you can earn 5.00% APY on balances of $5,000 or less in a given month if you receive at least $1,000 in direct deposits, and keep both of your accounts above a $0 balance during that month.* Additional balances above $5,000 will earn Varo’s base 3.00% APY.
Early Direct Deposit
As with many online banks, both accounts make your paycheck available 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 SpotMe3 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 avoid an overdraft by getting an cash advance through the app. Varo offers small cash advance loans of $20, $50, $75 or $100, for a fee of $0, $3, $4 or $5, respectively.
With both Varo and Chime, you can deposit cash into your bank account at more than 60,000 retail locations with Green Dot, which is a function many online banks don’t include.
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 is itself and FDIC-insured Bank.
Instant Money Transfer
With both Chime and Varo, you can send money instantly with no fees to others who their respective apps. Varo Bank also works with Zelle® for money transfers to folks who use other banks.*
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 over 60,000 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 its app, email or on the phone seven days a week.
Reach Varo customer service through online chat via the Varo app, email [email protected], or call 877-377-8276 during call center hours: Monday through Friday 8 a.m. to 4:30 p.m. Mountain Time. Federal holidays 8 a.m. to 4:30 p.m. (Closed Thanksgiving, Christmas and New Year’s Day.)
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.
The Secured Chime 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.4 Chime reports activity to credit bureaus, so the card is a less risky way to build or rebuild your credit.
Varo’s 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.
- Paper checks (though you can use bill pay to have checks sent for you).
Varo vs. Chime: Pros and Cons
We’ve gathered the pros and cons of Varo and Chime to help you decide which banking institution is right for you.
- Up to 5% APY for qualifying customers (3% for any customer).
- Nationally chartered bank.
- Small fee for small cash advances over $20.
- 2.00% APY for all customers.
- Automatic savings features
- No peer-to-peer transfers with Zelle.
Frequently Asked Questions (FAQs) About Varo vs. Chime
We’ve found the answers to the most commonly asked questions about Varo and Chime.
Chime and Varo are distinct companies operating online banking apps, but they each offer similar services, including fee-free savings and checking accounts.
Varo is a reputable and popular banking app backed by FDIC-insured accounts through Varo Bank, N.A. 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.
Yes, Varo Bank, N.A. received approval for a U.S. bank charter in July 2020 and is an FDIC member.
*Varo disclosure: APY is accurate as of December 1, 2022. This rate is variable and may change. No minimum balance required to open an account or obtain the stated rates. All Varo Savings Accounts begin earning the Standard Rate of 3.00% APY (Annual Percentage Yield). In order to qualify for the Elevated Savings Rate (5.00% APY on your first $5,000 of savings and 3.00% APY on the rest), you must meet these 2 requirements by the end of the last business day of the month: (1) Receive direct deposit(s) totaling $1,000 or more; and (2) End the month with a positive balance in both your Varo Bank Account and Savings Account. If you qualify this month, you will earn the 5.00% APY for next month. You’ll continue to earn 3.00% APY on any additional balance above $5,000.00. If you don’t meet the requirements, you’ll still earn 3.00% APY on your entire Savings Account balance.
Deposits are FDIC insured to at least $250,000 through Varo Bank, N.A.; Member FDIC.
*Chime disclosure: Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.
Instant Transfers: Sometimes instant transfers can be delayed. The recipient must use a valid debit card to claim funds. Once you are approved for a Chime Checking Accoun
Agreement for full Pay Anyone Transfers details. Please see the back of your Chime debit card for your issuing bank. See Terms and Conditions.
1ATMs: Out-of-network ATM withdrawal fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.
2APY: The Annual Percentage Yield (“APY”) is variable and may change at any time. The disclosed APY is accurate as of May 22, 2023. No minimum balance required. Must have $0.01 in savings to earn interest.
3Spotme: Chime SpotMe is an optional, no fee service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each at least once every 34 days. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member’s Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions.
4To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Checking Account. The qualifying direct deposit must be from you payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verificat deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.
Contributor Dana Miranda is a Certified Educator in Personal Finance® who has written about work and money for publications including Forbes, The New York Times, CNBC, Insider, NextAdvisor and Inc. Magazine.