Chime provides fee-free online banking services through a well-received mobile app.
Money expert Clark Howard likes online-only banks because they usually don’t charge fees and carry low (or zero) minimum balance requirements.
Chime offers rich features, a middling interest rate and a checking account with direct deposit, a debit card and a free ATM network.
Table of Contents
- Chime Review: Quick Look
- What Is Chime?
- Chime Checking Account
- Chime Savings Account
- Chime’s Notable Features
- Chime Review: Where It Shines
- Chime Review: Where It Falls Short
- Who Should Use Chime for Banking
- Online Banking: Alternative Options
Chime Review: Quick Look
| Company Name | Chime |
|---|---|
| Company Type | Financial software company (banking services) |
| Key Features | Well-liked app, automated savings, early access to direct deposits |
| Downsides | Lacks branches, joint accounts and loans |
| Best For | Anyone OK with banking online, especially the unbanked and those with a negative banking history |
What Is Chime?
Founded in 2013, San Francisco-based Chime considers itself a financial services software company. But for all practical purposes, it operates like a fee-free online bank.
It doesn’t have a bank charter. Instead, it partners with Bancorp Bank and Stride Bank, which are FDIC members.
Chime made its public debut on the Dr. Phil show in 2014. The company has raised about $2.3 billion and was valued at $24.3 billion in its Series G round in August 2021.
“Nobody wants to go into bank branches, nobody wants to touch cash anymore, and people are increasingly comfortable living their lives through their phones,” Chime CEO Chris Britt told CNBC in September 2020.
That type of success has attracted scrutiny from regulators. At the behest of the California Department of Financial Protection and Innovation, Chime agreed to stop using the term “bank” in its marketing in May 2021.
Chime acquired Salt Labs in June 2024. Salt Labs is “an employee rewards and incentives platform for frontline workers.”
Chime Checking Account
A Chime checking account, formerly called a “spending account,” is the company’s equivalent of a bank checking account — although you won’t be getting a checkbook.
Account holders get a Visa debit card and access to online banking services through Chime’s mobile app.
A Chime Checking Account is an FDIC-insured deposit account. It can receive direct deposits. It supports pre-authorized withdrawals and ACH transfers. Chime also offers free transactions and free person-to-person transfers. It’s compatible with Apple Pay, Google Pay and Samsung Pay.
Customers can withdraw money from Chime via the MoneyPass, Allpoint and Visa Plus Alliance ATM networks (50,000+ ATMs).
Chime allows customers to make deposits via:
- Direct deposit
- Transfer from a linked bank account
- Mobile deposit of a paper check
- Cash deposit through third-party services (more on that later)
The online bank challenger doesn’t offer loans or products such as Certificates of Deposit and money market accounts. It makes most of its revenue when its customers use its debit or credit cards.
Chime is online-only, so it doesn’t feature brick-and-mortar locations. Free from the overhead expenses of operating physical branches, Chime passes along those cost savings to customers. It doesn’t charge monthly or overdraft fees and doesn’t require a minimum deposit.
Clark is a huge fan of the online banking model: He thinks many people overestimate their need for physical bank locations.
Chime Savings Account
You must open a Chime Online Checking Account before you can open a Chime High-Yield Savings Account.
As of July 2024, the savings account pays 2.0% APY. Chime offered a pretty competitive interest rate prior to the Fed interest rate hikes a few years ago. But many online banks increased their savings account interest rates at a much higher pace.
Chime is no longer one of my 16 best high-yield online savings accounts in part due to its interest rate no longer being competitive enough.
Clark advocates for automated savings, which aligns well with Chime. The online challenger of traditional banks offers several cool features that encourage automated savings.
Chime’s Notable Features
Chime is a financial software company, so it makes sense that it is feature-rich relative to traditional banks. Here are the notable features Chime offers.
SpotMe®: In most cases, if you try to charge an amount that exceeds your account balance, Chime will decline the charge. That’s in line with Clark’s philosophy on overdraft protection. However, if you manage to get a negative balance, the SpotMe feature allows you to avoid overdraft fees by offering protection up to $200. You must make a monthly direct deposit of $200 or more to qualify. Your limit depends on your account history, how long you’ve been a member and the amount of your monthly direct deposit. Chime will reimburse itself when you make your next direct deposit.
Early Access to Direct Deposits: Fill out some paperwork and get your direct deposit up to 48 hours early via your Chime Checking Account.
Save When I Get Paid: This feature automatically slides 10% of any direct deposit of at least $500 straight into your Chime Savings Account.
Savings Round-Ups: This automatically rounds up your debit card purchases to the nearest dollar and deposits the change into your savings account.
Chime Checkbook: Chime will create and mail you already filled-out paper checks at no charge. The money gets pulled from your account when Chime drafts the check. Your limits are $5,000 per payment and $10,000 per month.
Secured Chime Credit Builder Visa ® Credit Card: Chime’s credit card is designed to help consumers build their credit. For example, your “credit limit” is based on the amount of money you transfer from your checking account to your Credit Builder account. You can charge only up to that amount, ensuring you’re always paying off your credit balance each month.
Visa Zero Liability: Chime issues Visa debit cards. Visa’s policy ensures cardholders aren’t responsible for unauthorized charges. You can instantly block transactions on your Chime debit card from the app.
Chime Review: Where It Shines
Here are some of the biggest benefits Chime offers:
- No fees. Clark says he hates that big traditional banks “fee you to death.” Chime is at the opposite end of the spectrum, getting rid of most traditional fees.
- Typically strong interest rate on savings. Chime’s savings account currently pays 2.0% APY as of July 2024.
- Large free ATM network. Withdraw money via your debit card for free from 50,000+ ATMs.
- Well-reviewed app. The Chime app, rated 4.7 on Android and 4.8 on iOS, is the highest-rated banking app I came across after researching more than 70 companies. In addition to being well-designed, it will let you set up direct deposit inside the app, show you where the closest ATMs are, provide your daily balance and give you transaction notifications.
- Easy to qualify and sign up. Have you gotten rejected by a traditional bank because of a negative banking history? You probably can get an account with Chime. Are you unbanked and want fast, easy access straight from your phone? Chime fits that description. Do you just want as little friction as possible? Again, Chime is a match.
Chime Review: Where It Falls Short
Here are some of Chime’s biggest downsides:
- No physical locations. Clark thinks that physical banks aren’t necessary for most people. Of course, you’ll have to decide what’s best for you based on your circumstances and preferences.
- No joint accounts. If you want to open an account with a significant other, for example, you’re out of luck with Chime.
- No loans, CDs or money markets. Chime makes its money through kickbacks from Visa when customers use its debit and credit cards. It does not offer these traditional banking products.
- Fees for using out-of-network ATMs. You’ll pay $2.50 per transaction if you withdraw from an ATM outside of Chime’s free network.
- Often expensive to deposit cash. Online-only banks aren’t designed for people who regularly deposit cash. But Chime’s website says you can do so through its “cash deposit partners” at retail locations. Walgreens offers free cash deposits for Chime customers. The website doesn’t otherwise say how much deposits will cost you. It does say those services “may impose their own fees.” In the past, Chime has partnered with Green Dot; its cash deposits can cost up to $4.95 each.
- Abrupt account closings. In 2021, there were several media reports and discussions online that Chime abruptly closed some customer accounts. Possibly as a fraud prevention measure. Some affected account holders reported difficulty contacting Chime’s customer service and said they were unable to access their funds for some time.
Who Should Use Chime for Banking
What demographic does Chime appeal to most? That’s a tricky question. Chime caters to digital natives who have never had a traditional bank account or people with negative banking histories.
But it’s a great option for anyone open to banking through an online-only company.
You’d do well to consider Chime if you:
- Are comfortable with mobile banking and don’t need access to a physical branch.
- Want access to a company that charges you fewer fees for banking services and pays you more interest than a traditional bank.
- Don’t need to make regular cash deposits.
- Don’t currently have a bank or have a negative banking history.
- Can make at least $500 per month in direct deposits to your Chime account.
To the last point, most traditional banks use their own equivalent of a credit score, called ChexSystems, to decide whether to let you open an account. If you’ve had trouble opening a traditional bank account due to past issues, Chime — a “second chance bank” — could work for you.
Online Banking: Alternative Options
Are you interested in an online bank, but Chime just doesn’t seem like the best fit for you?
I wrote about the best online banks for Clark.com. Among my favorite choices is Ally Bank, which is similar to Chime in terms of its features and well-designed app. And unlike Chime, Ally supports joint accounts and offers a more competitive interest rate.
Another of my favorites is Capital One, which I’ve described as the ultimate jack-of-all-trades of online banks. Capital One’s banking option doesn’t necessarily market itself around a singular feature, but it’s extremely difficult to find a weakness.
Final Thoughts
If you want a joint account, physical branches or need a loan, Chime won’t meet your needs.
But if you’re unbanked, aren’t able to open an account with a traditional bank or want to bank with a no-fee, mobile-optimized online company, Chime is one of the best choices you’ll find.
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. Chime FAQs.
