Chime Bank Review

Chime is an online bank and financial technology company headquartered in San Francisco. Unlike traditional banks, Chime takes a digital-first approach to banking. It has no physical branches, interacting with banking customers primarily through the smartphone app and website instead.

Founded in 2013, Chime is among several non-traditional banks founded after the financial crisis in an effort to create a more transparent and technology driven banking environment, especially for younger banking customers.

One of the key drawbacks to Chime, as well as many other options in the non-traditional banking market, is that it doesn’t offer any of the savings products you’d expect from a traditional bank. There are no money market accounts or certificate of deposit (CD) accounts, nor does it offer loans or mortgages.

Chime excels because of its lack of fees, its easy access checking accounts and its mobile-first approach to banking. This makes Chime a great choice for younger bankers who want a simple checking account and a way to start saving money automatically. Chime’s “get paid early” feature also makes it a great choice for anyone living paycheck-to-paycheck who wants to avoid payday loans and can’t afford high banking fees.

High-income individuals and bankers who want to build wealth with a high-yield savings account should probably look elsewhere. The annual percentage yield (APY) of Chime’s only savings account offering is a negligible 0.01%.

Chime at a glance

Pros
  • No monthly fees or overdraft fees
  • Provides automatic micro-savings options
  • Large ATM network and mobile banking
  • Option to get your paycheck early
Cons
  • Savings account has a very low interest rate
  • Third-party fees for use of out-of-network ATMs
  • No CDs, loans or other banking products
  • No physical branches

What’s interesting about Chime

Chime, and other online banks like it, are clearly a direct response to consumers’ frustrations with traditional banking brands after the financial crisis. Despite its non-traditional status, Chime is still insured by the Federal Deposit Insurance Corporation (FDIC), so you can rest assured your money is safe.

Two of Chime’s most notable features are its automatic micro-savings option and the option for customers to “get paid early.” The micro-savings feature works by rounding up your debit purchases and automatically depositing the extra amount into your savings account. You can also save a percentage of your paycheck automatically once it’s deposited directly into your checking account.

With their “get paid early” direct deposit feature, Chime customers don’t have to wait until their paycheck is processed before their funds become available. When a direct deposit is received, customers can use the funds up to two days before they are electronically processed and finalized.

The most significant aspects of banking with Chime are the bank’s simplicity and transparency. There are no hidden fees or required minimum balances. If you start a checking account with them, you are immediately issued a Visa debit card which can be used anywhere Visa is accepted. Moreover, you can open a checking account in minutes online.

Things to consider

Chime has a very limited number of banking products. Its offerings are mainly limited to checking and savings accounts.

The automatic micro-savings and “get paid early” features are innovative, but they don’t make up for traditional banking options that help you build wealth. Chime is also not in the lending business, so you’ll have to go elsewhere for a mortgage, car loan or credit card.

Perhaps the biggest drawback of Chime is that it has no physical branches. This may not be a big problem for younger customers, as 77.6% of U.S. millennials are expected to use digital banking in some form by 2022, compared to 69.2% of Generation X and 48.5% of Baby Boomers. Furthermore, many people go to bank branches because they need to speak to a sales representative about a loan or a more complex banking product, all of which Chime doesn’t offer.

Nonetheless, 60% of U.S. banking customers would still prefer to visit a branch just to open a checking account, and there’s nothing like getting some face time with a banking representative to put your mind at ease.

Checking and savings accounts

Chime only offers a single checking account and a single savings account. They don’t come as a package, so you must sign up for them separately. However, it’s easy to sign up for them online.

Chime refers to its checking account offering as a “spending account.” It does not provide its customers with checks, although this bank does provide an online “checkbook” feature, which lets customers send checks by mail electronically through the website or app.

Spending account
  • Initial deposit requirement: $0
  • Minimum balance requirement: $0
  • Monthly fees: None
  • Overdraft fees: None
  • Over 10,000 in-network ATMs
  • Option to receive paycheck up to two days early
  • Third-party fees on out-of-network ATMs
Savings account
  • Initial deposit requirement: $0
  • Minimum balance requirement: $0
  • Monthly fees: None
  • Automatic Micro-savings options
  • APY: 0.01%

Money market accounts

Chime does not offer any money market accounts. For customers who are interested in investing in money market accounts, take a look at BBVA’s money market options or BMO Harris’ money market account offerings. Both are reputable banks and offer higher-than-average APYs.

CDs

Unlike a lot of other online only banks, Chime does not offer any CDs. If you’re looking for a digital-first bank that offers CDs, try Synchrony Bank, which offers a 12-month CD with a minimum of $2,000 that earns a whopping 2.00% APY, much higher than traditional banks.

Credit cards

Chime does not offer any credit cards. The only card they provide is a Visa debit card, which you receive when you open a spending account. There are tons of options for banks that offer credit cards, though, so if you’re looking for a new credit card, check out what Capital One or Chase Bank have to offer. Capital One is known for working with a wide range of credit scores, and Chase Bank has some of the best credit card rewards programs on the market.

The final word

Chime offers some innovative solutions for saving and managing your income, even if they only offer a very basic checking and savings account. Chime would be an excellent choice for younger bankers who aren’t interested in loans or high-yield savings accounts and only need the basics from their bank. The micro-savings options are also a great way for young people entering the job market to build solid savings habits.

Chime may also be a good option for individuals who live in areas that don’t have easy access to traditional bank branches. This type of customer could possibly use Chime to access secure banking without having to travel — as long as they have a smartphone and an internet connection.

For anyone looking for a strong savings product, a loan or a credit card, Chime can’t help. It’s not much of a draw for high-income individuals because it doesn’t provide any perks, and anyone trying to build a nest egg would probably have more success with another bank’s savings products or with an investment account. The only option might be to use Chime’s spending account in addition to another bank’s savings product. You’d be able to take advantage of the lack of fees and the “get paid early” option, but you’d still be missing out on Chime’s micro-savings feature.