Digital banking is gaining traction and many fintech companies got listed this year, including Affirm, Robinhood, and SoFi. Another fintech, Chime is in talks to go public at a potential valuation of $35 billion–$45 billion. The company offers online banking services. What are some of the other banks like Chime?
Chime is a San Francisco-based fintech that offers mobile banking services free of charge. The company offers innovative and consumer-friendly features. Its checking account, or “spending account” doesn't charge any fees or insist on a minimum balance. Chime processed $375 million in stimulus payments in 2020 for its users.
Is Chime a good bank?
Chime is a new age bank that doesn't have any physical branches. It has online-only operations, unlike traditional banks that have both physical and online presence. Chime isn't a bank in the traditional sense. Instead, it's a financial technology company. Chime offers its services through its mobile app, which is very popular among its users. This branchless “neobank” has more than 12 million customers.
Chime partners with two banks, the Bancorp Bank or Stride Bank, N.A., to offer its checking and savings accounts. Chime’s accounts still have FDIC insurance. Therefore, like traditional banks, it's safe to keep money with Chime. The company doesn’t charge any monthly fees or overdraft fees. Chime has a large ATM network and also provides early access to direct deposits.
So, while there are factors that make Chime a good bank, there are some drawbacks that make it an inferior alternative to traditional banks. One drawback is that the cash deposit is difficult and it might cost you to deposit money. Online transfers initiated through Chime are limited to $200 per day.
There have also been numerous reports regarding consumer complaints about access being denied to their Chime accounts and funds. The company maintains that these issues were caused by Chime’s heightened anti-fraud efforts during the COVID-19 pandemic.
Is Chime a credit card?
The Chime Credit Builder Visa is a good option for people looking for a low-cost option to build up their credit profiles. The card doesn’t have any fees or security deposits. Also, it doesn’t charge interest and no credit check is required when you apply. However, certain conditions must be met to obtain the card.
You need to have a Chime spending account to get a Credit Builder Visa card from Chime. You also need to have at least $200 in direct deposits to the account within the past 365 days. In some ways, the card resembles a prepaid debit card. You need to assign money to your Chime secured credit card from a spending account. It doesn’t let you spend more than what you have available as a secured account.
What are some other banks like Chime?
Other companies providing similar bank-like services include U.K.-based Revolut, Germany’s N26, and Brazil’s Nubank. Revolut is one of the major global players in the pure digital bank space with more than 14.5 million global customers as of August 2021.
Varo Bank is the first U.S. full digital bank because it got a national bank charter in 2020. Varo Bank is similar to Chime and offers its customers a bank account with no monthly fees and no ATM or overdraft fees. In the future, Varo Bank could be a serious rival to Chime.