For Chris Britt and his buddy, Ryan King, the idea that banks earned billions of dollars in overdraft fees yearly wasn’t right.
With overdraft fees going as high as $37 and the average Savings Account earning a measly Annual Percentage Yield (APY) of 0.60%, Chris and Ryan responded by launching Chime in 2013.
What is Chime?
Chime is a mobile banking app that provides users with traditional banking services without exorbitant fees and with greater convenience.
With Chime in your mobile phone, the days of lining up at a brick-and-mortar bank and at an ATM are few and far between.
However, Chime isn’t the only mobile bank app in the market. Other apps offer similar services but carry features that Chime doesn’t have.
In the following section, we’ll present a shortlist of online banks you might want to consider instead of Chime. We’ll put them head-to-head with Chime to help you decide which app is best for you.
What Are the Best Alternative Online Banks to Chime?
There are many online banks to choose from. We based our list on the number of users to narrow down the field.
According to a 2023 survey conducted by Cornerstone Advisors, Chime has acquired more than 38 million customers, which is more than the combined number of customers of SoFi, Dave, MoneyLion, and Current.
We’ll compare these online banks to Chime. For now, let’s learn more about them.
1. Cash App
Cash App is a financial app developed by Block Inc. It was launched in 2013 as Square Cash to compete with payment platforms like PayPal and Venmo.
Cash App gained popularity as a peer-to-peer fund transfer app and eventually expanded its offerings to include traditional banking services.
These banking services include:
- Savings Account
- Direct Deposits
- Visa Debit Card
- Cash Card
Since Cash App isn’t a bank, it has to partner with traditional banks to carry out these services. Cash App’s partner banks are Sutton Bank and Wells Fargo, insured by the Federal Deposit Insurance Corporation (FDIC).
What are the Key Features of Cash App?
Cash App has the following key features:
- Send and Receive Money
- Money Transfer
- RoundUps Auto-saving
- Buy stocks or ETFs
- Buy, sell, and receive Bitcoin
- Tax filing
What are the Pros and Cons of Using Cash App?
What are Cash App’s Ratings:
- The App Store: 4.8 out of 5 Stars
- The Google Play Store: 4.6 out of 5 stars
Who is Cash App Best For?
Cash App is the ideal mobile banking app for fledgling investors and cost-conscious depositors who value APY%.
2, SoFi
SoFi stands for Social Finance. It was founded in 2011 by a group of Stanford students who wanted to provide students with more affordable ways to pay for college instead of taking on debt.
From 2012 to 2019, SoFi expanded its offerings to include mortgages, student loan refinancing, personal loans, and loan refinancing for medical students and fellows.
In 2022, SoFi acquired its bank charter through SoFi Bank, N.A., and launched its SoFi combined Savings and Checking Account.
Here are the other banking services offered by SoFi:
- SoFi Credit Card
- SoFi Loans: Student Loan refinancing, home mortgages, personal loans, and auto loan refinancing.
- Investments: Stocks, Fractional Shares, ETFs, IRAs, IPOs, and Options.
- Insurance: Auto, Life, Home, Cyber, and Renter.
Deposits in SoFi’s Savings and Checking Account are protected up to $2 million by the SoFi Insured Deposit Program. Partner banks will handle deposits that exceed the FDIC insurance limit.
What are the Key Features of SoFi?
SoFi has the following key features:
- Vaults auto-savings
- RoundUps auto-savings
- SoFi Debit Card
- Financial Planning
- Estate Planning
- Rewards, points, and discounts on travel
What are the Pros and Cons of Using SoFi?
What are SoFi’s Ratings:
- The App Store: 4.8 out of 5 Stars
- The Google Play Store: 4.0 out of 5 stars
Who is SoFi Best For?
The combined Savings and Checking account is ideal for depositors who want a simpler banking experience. The high 4.6% APY is a game-winner for conservative people who prefer to keep their money in savings accounts.
3. Dave
Dave is a financial app that offers banking services through its partner, Evolve Bank & Trust. Since the FDIC covers Evolve Bank & Trust, your deposits are insured for up to $250,000.
Here are the banking products and services offered by Dave:
- ExtraCash Account
- Savings Account
- Checking Account
Dave gained popularity because of its ExtraCash Account, which allowed users to borrow up to $500 of their next paycheck. Its CashAI technology analyzes cash flow to determine if users qualify for its ExtraCash Account.
What are the Key Features of Dave?
Dave has the following key features:
- CashAI
- DaveGPT
- Side Hustle Program
- Goals Tracking
- Early release of deposits
What are the Pros and Cons of Using Dave?
What are Dave’s Ratings:
- The App Store: 4.8 out of 5 Stars
- The Google Play Store: 4.4 out of 5 stars
Who is Dave Best For?
Dave is a wonderful app for people who constantly experience cash shortfalls. The Side Hustle feature will greatly help if you’re frequently in between jobs.
4. MoneyLion
MoneyLion is a fintech company founded in 2013 with the purpose of helping struggling consumers maximize their savings.
To provide banking services to its customers, MoneyLion partnered with FDIC-insured Pathward.
Here are the banking services offered by MoneyLion:
- Checking Account
- Debit Card
- Direct Deposit
- Insurance
MoneyLion is also backed by financial heavyweights such as Blackrock, Edison Partners and Greenspring Associates, Fintech Collective, Grupo Sura, and Sanhua Capital.
What are the Key Features of MoneyLion?
MoneyLion has the following key features:
- Credit Builder Plus
- InstaCash
- Auto-Invest platform
- Cryptocurrency investment
- Lead generation services
What are the Pros and Cons of Using MoneyLion?
What are MoneyLion’s Ratings:
- The App Store: 4.7 out of 5 Stars
- The Google Play Store: 4.5 out of 5 stars
Who is MoneyLion Best For?
MoneyLion is recommended for first-time investors. The Risk Slider program will help you design an investment portfolio according to your aversion to risk.
5. Current
Current is a financial app that provides banking services through its FDIC-supported partners, Choice Financial Group and Cross River Bank.
Similar to SoFi, Current offers a combined Savings and Checking Account that includes a debit card.
Here is the list of banking services offered by Current:
- Combined Savings and Checking Account
- Debit card
- Savings Pods
- Teen Bank Account
Previously, Current had a paid premium membership plan. It did away with the paid format and decided to offer the same features free of charge.
What are the Key Features of Current?
Current has the following key features:
- Budget-tracking
- RoundUps
- Earn cashback points and rewards
- Receive your paycheck two days earlier
- Invest in cryptocurrency
What are the Pros and Cons of Using Current?
What are Current’s Ratings:
- The App Store: 4.8 out of 5 Stars
- The Google Play Store: 4.6 out of 5 stars
Who is Current Best For?
Current is ideal for budget-conscious consumers who want to keep a tight watch on their finances. It’s also a good first step for teens who want to start saving money.
How Does Chime Compare with the Other Online Banks?
Now, let’s compare the online banks we discussed earlier with Chime.
For our “Tale of the Tape,” we based the comparisons on the following categories:
- Number of users
- APY% on Savings Account
- Monthly Fees
- Availability of a Credit Builder Card
- Overdraft Fees support
- Minimum Balance Requirement
- Number of ATMs
As you can see, these online banks offer offerings similar to Chime’s. Chime’s 2.00% Savings Account APY isn’t as impressive as the 4.6% of SoFi and Dave, but Chime has the advantage of having the Credit Builder Card.
The app automatically schedules payments for purchases made with Chime’s Credit Builder Card to ensure your bills are updated. Then, Chime sends a payment report to the major credit bureaus.
Chime can accommodate fee-free overdrafts up to $200, which is higher than the $50 accommodation offered by SoFi. CashApp, Dave, and MoneyLion offer interest-free cash advance service if you have an overdraft.
Why is Chime the Number One Mobile Banking App?
From the comparison, it’s clear why Chime has more users. Although its APY of 2.00% is lower than SoFi and Dave, it’s still higher compared to traditional banks.
Chime makes up for the lower APY by removing fees and charges on its transactions and offering a higher accommodation for overdrafts.
Dave and SoFi have a 4.6% APY. However, with Dave, you’ll be charged a monthly subscription fee in addition to money transfer fees. While SoFi’s fee-free overdraft coverage is only up to $50.
Chime’s Credit Builder Card is the main differentiator.
With the Current Build Credit Card, you’ll incur the following fees:
- Out-of-Network ATM fee: $2.50
- Late payment fee: 3% of the total outstanding balance
- Foreign transaction fee: 3% of the total transaction amount
- Card replacement fee: $5 per card
- Cash deposit fee: $3.50 per deposit
💡 Note: Chime’s Credit Builder Card is fee-free.
Is Chime a Bank?
No, Chime isn’t a bank. Chime is a financial technology company that offers mobile banking services through regulated, FDIC-insured banks.
Chime’s partner banks are The Bancorp Bank, N.A., and Stride Bank, N.A.
When you open a Chime Savings Account or a Chime Checking Account, Chime doesn’t hold your money; the partner banks do.
Since Bancorp Bank and Stride Bank are insured by the FDIC, your deposits in a Chime Savings Account are likewise insured up to $250,000.
In exchange for handling its banking services, Chime provides the following services to its partners:
- Develop innovative banking products;
- Create high-tech tools to improve banking processes;
- Design and introduce efficient systems to enhance customer experience.
Chime, founded in 2013 by Chris Britt and Ryan King, is headquartered in San Francisco, U.S.A. Chime has received over one million 5-star reviews on the App Store and the Google Play Store.
What Are the Benefits of Using Chime?
Chris Britt and Ryan King’s vision for Chime was to provide customers the services of a traditional bank but without its fundamental flaws:
- Delayed access to funds
- Account opening charges
- Transaction fees
- Excessive overdraft charges
Chime calls it “Member-first Mobile Banking.”
Chime follows through with its vision by providing customers with the following benefits:
1. Online Banking Without Monthly Fees
- No monthly account fees.
- No minimum account balance fees or requirements.
- No overdraft charges for up to $200 on Chime debit card purchases.
- Send and receive money immediately without worrying about fees.
2. Member-first Convenience and Ease of Use
- Get paid up to two days early with direct deposit service.
- Deposit checks anywhere with just a photo.
- Automatic Savings feature ensures guaranteed savings when you want it.
- Access to over 50,000 fee-free ATMs.
- Park your money in a high-yield Savings Account.
- Enjoy cash-back benefits on purchases.
- Get federal tax refunds up to six days early with direct deposit.
3. High-level Security Features
- Disable transactions in case you lose your Chime card.
- All transactions are encrypted.
- Deposits are FDIC-insured.
- Real-time transaction alerts.
- Protection from unauthorized charges.
Compare Chime with traditional banks like Chase and Wells Fargo:
Has Chime’s success made the big banks blink and take notice?
A report by S&P Global Intelligence in 2021 showed that the big banks generated $2.34 billion in overdraft fees.
Fast-forward three years later, and the latest S&P Global Intelligence study shows that big bank earnings in overdraft fees fell to $1.36 billion in the first quarter of 2024. The reasons cited for the three-year low are regulatory pressure and increased competition.
What are Chime’s Banking Services?
Here is a list of banking services offered by Chime:
1. Checking Account
- 24/7 mobile banking
- No account opening and monthly fees
- Transact with more than 50,000 fee-free ATMs.
- If you qualify for SpotMe, you are entitled to fee-free overdraft protection for up to $200 of purchases.
2. Credit Builder
- The Chime Credit Builder Card pays your monthly bills on time and sends a report to the major credit bureaus.
- The card carries no annual fees and doesn’t require a large security deposit.
- Applying for the card will not involve a credit check.
- If you qualify for SpotMe, you are entitled to fee-free overdraft protection for up to $200 of purchases.
3. Visa Debit Card
- Connect your Chime Visa Debit Card to your mobile phone—no need to bring your wallet. Just pay using your mobile phone.
- There are no monthly fees, maintenance fees, and replacement fees.
- There is no minimum account balance requirement.
4. SpotMe
- Get assistance of up to $200 on debit and credit card purchases without overdraft fees.
- Help out friends by boosting their SpotMe limits.
5. High-Interest Savings Account
- 2.00% APY on your deposit.
- There is no monthly fee or account balance fee.
- Automatic savings feature rounds up debit card purchases to the nearest dollar and deposits the amount to your Savings Account.
6. Second-Chance Banking
- Open a savings or checking account regardless of your banking history.
- Enjoy the same benefits as holders of regular savings and checking accounts.
7. MyPay
- Get up to $500 of your salary before payday.
- There are no interest charges.
8. Get Paid Early
- Get your salary two days earlier with direct deposit.
- Real-time tracking and notification.
How to Open a Chime Account
Follow the steps below to open a Chime account.
- Apply for a Chime Account. Be ready to provide the following information:
- Full name
- Birth date
- Home address
- Social Security Number (SSN)
- Download the Chime app.
- The App Store for iPhone
- The Google Play Store for Android
- Go to the Website or log into the mobile app.
- Connect a bank account to transfer funds.
- Go to Settings or “Move Money” to open a direct deposit account.
💡 Note: You must be 18 years old to open a Chime account.
Frequently Asked Questions (FAQs)
Who is Chime’s biggest competitor?
In terms of the number of customers, Chime’s biggest competitor is Cash App, which has 22 million users.
Which is better, Chime or Varo?
Chime and Varo are comparable but have a few differences. If you prefer a higher APY for your savings account, choose Varo.
Compared to Chime’s 2.00% APY, Varo offers 3.00% APY on Savings Accounts without a required minimum balance and 5.00% APY on accounts with a minimum $5,000 balance.
Choose Chime if you want protection against overdraft fees. Varo doesn’t allow overdrafts but offers a cash advance program. Chime has the SpotMe service, which allows customers to overdraft up to $200 without fees.
Summary
If you’re thinking about using mobile banking services, Chime is a good choice.
You don’t have to worry about monthly fees, maintaining minimum balances, getting charged for transferring funds, or using the ATM. If your account has insufficient funds, Chime’s SpotMe service can help you out.
Chime’s Credit Builder Card is a game-changer that can help you become a responsible consumer. Then, there’s RoundUps which automatically rounds off purchases to the nearest dollar and deposits the balance to your Savings Account.
However, Chime isn’t the only app in the market. Just because Chime has the highest number of users doesn’t mean it’s the right one for you. There are other apps that offer similar services plus features Chime doesn’t have.
Assess your current situation. Maybe Cash App, Money Lion, Dave, Current, or SoFi fits your needs better than Chime.
