Chime Review: Pros & Cons of the Bank Challenger

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Chime provides fee-free online banking services through a well-received mobile app.

Money expert Clark Howard likes online-only banks because they don’t have many fees and carry low (or zero) minimum balance requirements.

Chime offers a number of rich features, a competitive interest rate and a spending account with direct deposit, a debit card and a free ATM network.


Table of Contents


Chime Review: Quick Look

Company NameChime
Company TypeFinancial software company (banking services)
Key FeaturesCompetitive interest rate, automated savings, early access to direct deposits
DownsidesLacks branches, joint accounts and loans
Best ForAnyone OK with banking online, especially the unbanked and those with 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’s a fee-free online bank. Technically, 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 $1.5 billion and was valued at $14.5 billion in its Series F round in September 2020.

“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 at the time.

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 Spending Account

A Chime Spending Account is the company’s equivalent of a 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 Spending 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.

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Customers can withdraw money from Chime via the MoneyPass and Visa Plus Alliance ATM networks (38,000+ 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 (which is not free; 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 also 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 Spending Account before you can open a Chime Savings Account.

As of May 2021, the savings account pays 0.50% APY, which is extremely competitive. In fact, I included Chime in my list of the six best high-yield online savings accounts.

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’s feature intensive relative to banking services. 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 simply decline the charge. That’s in line with Clark’s philosophy on overdraft protection. However, if you do manage to get a negative balance, the SpotMe feature allows you to avoid overdraft fees by offering protection up to $200. You must make at least $500 in monthly direct deposits to qualify. Chime will reimburse itself when you make your next direct deposit.

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Early Access to Direct Deposits: Fill out some paperwork and you can get your direct deposit pay up to 48 hours early via your Chime Spending 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.

Credit Builder: 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 spending 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.
  • Strong interest rate on savings. Chime’s savings account pays 0.50% APY.
  • Large free ATM network. Withdraw money via your debit card for free from 38,000+ ATMs.
  • Well-reviewed app. The Chime app, rated 4.6 on Android and 4.8 on iOS, is the highest-rated banking app I came across after researching more than 60 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 own circumstances and preferences.
  • No joint accounts. If you want to open an account with a significant other, for example, you’re out of luck (for now) 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.
  • 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. The website doesn’t say how much that 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.

Who Should Use Chime for Banking

What demographic does Chime appeal to most? That’s a tricky question. Chime definitely caters toward digital natives who have never had a traditional bank account or people who have negative banking histories.

But it’s a great option for anyone open to banking through an online-only company.

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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.

Recently, there have been several reports in the media and in places where people congregate online that Chime has been abruptly closing customer accounts. Possibly as a fraud prevention measure.

Some affected account holders have reported difficulty contacting Chime’s customer service and have been unable to access their funds for at least a period of time.

Keep reading to learn about alternatives to Chime.


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, competitive interest rate and well-designed app. And unlike Chime, Ally supports joint accounts.

Another one 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 simply want to bank with a no-fee, mobile-optimized online company, Chime is one of the best choices you’ll find.

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Note: Chime is a financial technology company, not a bank. Banking services provided by, and debit card issued by, The Bancorp Bank or Stride Bank, N.A.; Members FDIC. Chime FAQs.


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