Chime vs Varo: Which is Better?
Chime and Varo are two of the most popular online-only banks (neobanks), offering digital-first banking services with no monthly fees. While both have similar features such as mobile banking, no-fee checking and savings accounts, and access to direct deposit, they also have key differences that could make one a better fit depending on your financial needs. Here’s a detailed comparison of Chime and Varo.
What is Chime?
Chime is a neobank designed to offer simple, no-fee banking services with a focus on financial inclusion and ease of use. It provides checking and savings accounts with no monthly maintenance fees, no overdraft fees, and access to a wide network of ATMs. Chime aims to create a seamless banking experience for users, especially those looking to avoid traditional banking fees.
Key Features of Chime:
- No Fees – No monthly maintenance fees, no overdraft fees, no minimum balance requirements.
- Visa® Debit Card – Chime provides a Visa debit card that can be used for purchases and ATM withdrawals.
- Early Direct Deposit – Get paid up to two days earlier with early direct deposit.
- Automatic Savings – Chime rounds up purchases to the nearest dollar and deposits the difference into a savings account.
- Fee-Free ATM Access – Access to over 24,000 fee-free ATMs nationwide.
- Mobile-First Banking – Chime operates primarily through its app, providing a streamlined and mobile-friendly experience.
What is Varo?
Varo is another neobank that offers simple, no-fee banking services, with the added benefit of FDIC insurance. Varo provides a range of features designed to help users save, budget, and manage their finances. Like Chime, it focuses on mobile banking but offers a few extra perks like access to credit-building tools and higher interest rates on savings accounts.
Key Features of Varo:
- No Fees – No monthly maintenance fees, no overdraft fees, no minimum balance requirements.
- FDIC Insurance – Varo accounts are FDIC-insured up to $250,000.
- Cash Advances – Varo offers cash advances of up to $100 with no interest or fees for eligible customers.
- Savings Account with High Interest – Varo offers one of the highest interest rates for savings accounts in the neobank industry.
- Credit Building Tools – Varo offers tools like a Varo Believe credit card to help users build or improve their credit.
- Mobile Banking – Varo operates with a user-friendly mobile app for managing your accounts.
Key Differences Between Chime and Varo
| Feature | Chime | Varo |
|---|---|---|
| Type of Bank | Neobank (online-only) | Neobank (online-only) |
| No Monthly Fees | Yes | Yes |
| Interest on Savings | Yes, but lower rate compared to Varo | Yes, with a higher interest rate on savings |
| Credit Building Tools | No credit-building features | Offers credit-building tools like the Varo Believe card |
| Cash Advances | No cash advances offered | Yes, cash advances up to $100 |
| FDIC Insurance | Yes, up to $250,000 | Yes, up to $250,000 |
| ATM Access | 24,000+ fee-free ATMs | 55,000+ fee-free ATMs |
| Visa Debit Card | Yes, with rewards on select purchases | Yes, but no cashback or rewards |
| Early Direct Deposit | Yes, up to two days earlier | Yes, up to two days earlier |
| Savings Goals | Automatic round-up savings feature | Goals-based savings with higher interest rates |
| Customer Support | Available via app and phone support | Available via app, chat, and phone support |
Pros and Cons of Chime
Pros:
- No Fees – Chime’s no-fee banking, including no monthly fees, no overdraft fees, and no ATM withdrawal fees at over 24,000 ATMs, makes it a great option for fee-conscious customers.
- Mobile-First – Chime’s mobile app is simple to use and offers a user-friendly experience.
- Early Paycheck Access – Chime offers early direct deposit, which allows you to access your paycheck up to two days earlier.
- Automatic Savings – Chime’s automatic savings feature helps you save without much effort by rounding up purchases and depositing the difference into a savings account.
Cons:
- Limited Features – While Chime offers essential banking services, it lacks investment options and credit-building tools.
- No Credit-Building Tools – Chime does not have tools to help you build or improve your credit score.
- Limited Cash Deposit Options – Chime relies on third-party retailers for cash deposits, which can be less convenient compared to traditional banks.
Pros and Cons of Varo
Pros:
- High Interest Rates – Varo offers a higher interest rate on savings accounts compared to Chime, which could be a major plus for savers.
- Cash Advances – Varo allows for cash advances of up to $100 with no fees or interest, which can help in emergencies.
- Credit Building – Varo’s credit-building tools, such as the Varo Believe credit card, can be a helpful feature for users looking to improve their credit scores.
- Mobile-First Experience – Varo’s mobile app offers a clean, easy-to-use interface for managing accounts on the go.
Cons:
- No Cashback Debit – Unlike some competitors, Varo does not offer cashback on debit card purchases.
- Limited ATM Network – While Varo has access to a large ATM network, it’s smaller compared to Chime’s network of over 24,000 fee-free ATMs.
- Higher Requirements for Some Features – To earn the highest interest rates and access certain features like cash advances, Varo requires you to meet certain eligibility requirements, such as receiving direct deposits into your account.
Which One is Better for You?
- For No-Fee, Simple Banking: If you’re looking for basic banking with no fees, Chime is an excellent choice. It provides fee-free checking and savings accounts with easy-to-use features and a wide network of ATMs.
- For High-Yield Savings and Credit Building: Varo may be the better choice if you want to earn a higher interest rate on your savings or if you need tools to help you build credit. Varo’s savings account offers one of the highest rates in the industry, and the Varo Believe card can help you improve your credit score.
- For Cash Advances: Varo has an edge if you’re interested in cash advances. With Varo, you can access up to $100 in cash advances with no fees or interest, which is a great option for those who need immediate funds.
- For Comprehensive Mobile Banking: If you’re focused on having a smooth, mobile-first banking experience with a focus on savings and credit building, Varo offers a comprehensive suite of tools.
Conclusion
Both Chime and Varo offer no-fee, digital-first banking, but they cater to different customer needs. Chime is best suited for individuals who want a simple, fee-free banking experience with essential features like early paycheck access and automatic savings. Varo, on the other hand, is a stronger option for those seeking higher interest rates on savings, cash advances, and credit-building tools. Ultimately, the choice depends on your specific needs, such as the importance of saving, credit-building, or accessing emergency funds.