Varo vs. Chime: Which One Is Better in 2022?

Do you manage your bank account via a mobile banking app? Varo and Chime are two online options that can help you walk away from branch banking. Their online apps also make banking more accessible with round-the-clock availability that’s not bound to branch locations.

All you have to do is open the mobile app on your smartphone to manage your accounts, with both services offerings checking, savings and more.

An Overview of Varo vs. Chime

As mobile apps, Varo and Chime are relatively straightforward, but Varo and Chime are straightforward mobile apps. These apps allow you to check your checking and savings accounts from your smartphone.

These offer many similar features and options, which aim to simplify banking and finance management for you. This way, you don’t have to go to traditional brick-and-mortar banks.

Chime offers no-frills accounts that come with features that simplify money management and savings.

In contrast, Varo offers free checking accounts without a minimum account balance. It also offers a high-yield savings account, no banking fees and an exceptional banking experience.

Varo’s customer service is excellent, with a 4.7 out of 5-star rating on Google Play.

What Is Chime?

Chime can help you reach your savings goals by offering saving accounts and online spending without charging a fee. Unlike Varo, however, it is not a bank, but a financial technology company that provides a whole host of services designed to be simple and cost-effective for consumers.

The app has built-in features such as automatic savings, fee-free overdraft protection, ATM networks and more. Chime has gained popularity for providing many fee-free services. If there are any fees, they are relatively low — you only have to pay $2.50 for out-of-network transactions.

What Is Varo?

In the United States, Varo was the first online banking app that gained approval for a full-bank charter. As a result, Varo has full bank status, unlike the other banking apps associated with national banks.

Is Varo a Good Bank?

Well, it certainly offers a grand suite of various financial services.

These banking services include cash advance loans and credit-builder programs. Moreover, it offers Varo advance, which is an optional overdraft protection feature.

It also offers free ATM transactions, which isn’t surprising, since most of the banking services that Varo offers are free. You only have to pay $2.50 to Varo if you use third-party ATMs.

What Are the Similarities Between Chime and Varo?

Varo and Chime offer very similar services, and because of this, it can be hard to know which is the better option. If you’re wondering whether Varo is better than chime, here is a detailed comparison.

Varo and Chime both offer a debit account and optional savings account without charging monthly fees. In addition, they both simplify the banking process by using automatic savings tools, which automatically build a savings account.

When you transfer money to your checking account, an adjustable percentage can be automatically transferred to the savings account. Both Chime and Varo offer high-yield savings.

Interest-Earning Accounts

Chime offers the users a 0.50% APY on their savings without a balance requirement.

In contrast, Varo offers a variable APY of 0.50% to 3.00%; you’ll need at least $0.01 to earn this interest. To earn the highest interest rate, you’ll have to meet certain requirements, one of which is to set up direct deposits of $1,000 or more each month.

Early Direct Deposit

Similar to many other online banks, Varo and Chime get you your paycheck two days early in case of direct deposit payments. When your employer processes payroll, the money becomes available to you two days before your scheduled payday.

Besides this, both banking apps let you deposit money from over 90,000 retail locations through Green Dot.

Bill Pay and Money Transfer

Varo and Chime also let you pay your bills through ACH transfer. Another benefit of these online banking apps is that you can instantly send money to other accounts without paying a banking fee.

Instant money transfer saves you from making a trip to a traditional bank branch. Since these companies provide FDIC-insured accounts, the banking is secured. Chime partnered up with The Bancorp Bank for FDIC backing while Valo Bank backs up Varo Money.

What Are the Differences Between Varo and Chime?

The primary difference between the two banking companies is that Varo has a “Save Your Pay” rule. It allows you to set aside a set percentage of your salary. The bank lets you decide the percentage.

In contrast to this, Chime only offers a static 10% savings on the “Save When You Get Paid” plan.

Which Is Better: Varo or Chime?

Since Varo and Chime offer similar features, you may want an account with either of the companies. But before you make your decision, you should go through their features.

Fee-Free Accounts

Both the companies offer fee-free checking and savings accounts. In addition, you can fund the account through direct deposits or money transfers from external bank accounts.

These companies do not require you to pay a monthly maintenance fee or banking fees. You can also get early paychecks through these apps. The Visa card requirements and options are also very similar.

Savings Plan

One significant difference between the two companies is the savings plan. While Varo lets you choose a percentage of your deposits to set aside in savings, Chime only lets you set 10% aside automatically. Of course, you could always manually move money from your Chime checking account into your savings account, so this is only a mild convenience.

Interest Rates

Although Varo is virtually identical to Chime, it offers better interest rates for balances under $5,000. With this difference in mind, you can make your decision according to your savings plan.

Are There Better Banks Than Chime or Varo?

Chime and Varo do not use ChexSystems, which many traditional banks use. These systems determine whether you’re eligible for a bank account.

Since neither of these companies uses ChexSystem, having a bad banking history will not disqualify you from banking with Chime or Varo.

Product Offerings

Varo and Chime do not offer joint accounts or financial products like auto loans, personal loans or mortgages. They also do not offer paper checks.

Other Banks To Consider

If you want to access these financial services, there are great alternatives to Chime and Varo. These include Axos Bank, Quontic Bank and Ally Bank. These competitors offer impressive in-demand features with great rewards for banking online.

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.

This article originally appeared on GOBankingRates.com: Varo vs. Chime: Which One Is Better in 2022?