Chime Review: Checking and Savings
Chime bank opened for business in 2014. But, with more than 5 million accounts opened, it's already breaking records as a result of its innovative and customer-friendly approach to banking.
By October 2020, it was more valuable than famous companies such as United Airlines, Tiffany or Whirlpool, according to CNN Business.
What Is Chime, and What Bank Does Chime Use?
Although it's often called a "neobank" or a "challenger bank," Chime is more a technology company than a financial institution. Indeed, CNN Business calls it "a consumer fintech [financial technology] company."
How does Chime work?
So it partners with established, mainstream banks to deliver many of the banking aspects of its offerings.
Its two partners are The Bancorp Bank and Stride Bank, N.A. For example, your Chime debit card will be issued by Bankcorp Bank, while the Chime Visa® Credit Builder Card is issued by Stride Bank.
Chime Online Banking: Essentials for Checking Accounts
Here are headline features for its checking accounts ("Chime spending accounts," in this bank's parlance):
- Get Paid Early - Opt to have your salary deposited directly into your account and access your money up to two days early compared with most other banks
- Overdraft protection - There are no overdraft fees up to $100. Use your debit card to get up to $99.99 overdrawn and you won't be charged, providing you make at least $500 in monthly direct deposits
- No hidden fees - No minimum deposit fees and no monthly fees
- Use more than 38,000+ fee-free MoneyPass® and Visa® Plus Alliance ATMs with no fees. (Charges still apply for out-of-network ATMs)
- State-of-the-art app for mobile banking - Does pretty much everything, including directing you to your nearest fee-free ATM
- Visa® debit card - Make a debit card purchase everywhere Visa is accepted. That's almost everywhere
- Chime Second Chance Banking - Open an account with no credit checks, including no ChexSystems
- Credit Builder Card - A "secured" credit card, meaning you can only spend what you deposit. But Chime will report activity to the three big credit bureaus, allowing you to build your score
- Automatic savings option - Round up each of your purchases to the nearest dollar and have the extra automatically credited to your optional savings account (or credit a set sum to your savings account each payday)
Fees and services on Chime accounts sound great. But what's not so good?
Chime spending account downsides
Just what are the downsides? Well, for one, it's online only and has zero branches. That may be an issue if you value a face-to-face banking relationship.
That lack of branches can also make depositing cash more difficult. You have to go to a Green Dot location to do so. Yes, there are thousands of those across the country, including branches of 7-Eleven, CVS, Kmart, Safeway, Walgreens, Walmart and others. But note that some locations may charge a modest fee for a cash deposit transaction.
Finally, be aware that Chime - in common with other online banks - doesn't offer as comprehensive a range of banking services as some of its traditional bank competitors. So don't expect checkbooks, credit cards (except the Credit Builder secured one), auto loans, mortgages and so on.
Chime Online Banking: Essentials for Savings Accounts
Here's what's good about a Chime savings account:
- Annual percentage yield (APY) well above the average national savings account rate of 0.05%, according to the Federal Deposit Insurance Corporation (FDIC). So Chime's APY can be as much as 20 times higher than that
- No fees on Chime savings accounts - at all
- No minimum balance requirement and no ceiling on interest earned
- FDIC-insured - Your money is safe up to the deposit insurance limit of $250,000 "per depositor, per insured bank, per ownership category"
- Automatic savings service - If you so choose, you can painlessly top up your savings account by setting up automatic transfers from your Chime spending account. Automatically round up your debit card purchases to the nearest dollar or transfer funds when your salary arrives (or both)
Again, that sounds great. But…
Chime savings account downsides
You must have a Chime "spending" (checking) bank account in order to open one of its savings accounts. There doesn't seem to be any rules about how much you use either account, so this may not be a big burden.
You may be able to hunt down a better APY than Chime's. There aren't many higher yields and it is often roughly 20 times the national average. Still, we managed to find one on the day this was written.
But that higher rate applied only to savings balances up to $10,000. As always, it's worth doing some desk research to find the account or accounts that suit you best.
How Is Chime's Customer Service?
Chime has an A+ rating with the Better Business Bureau, which is a great start. But not all its customers are fans when it comes to the BBB's reviews section.
Of course, Chime gets plenty of negative reviews on a number of online customer forums. But that should surprise precisely nobody because every bank with millions of customers is bound to mess up sometimes. And they all receive large numbers of online complaints from disgruntled former and current account holders.
With that in mind, Chime doesn't do at all badly. For example, on Trustpilot on the day this was written, 80% of reviewers ranked it "excellent" and another 10% said it was "great."
If you want to gauge how bad a financial institution is, you can check the complaints database of federal regulator at the Consumer Financial Protection Bureau (CFPB). And, when we checked, there were only 223 complaints over the previous three years.
For a company with more than 5 million customers, that's quite an achievement. However, you have to bear in mind Chime's rate of growth. Three years ago, it would have had many fewer customers.
The Great Outage at Chime
One area of vulnerability for all banks - but especially tech-heavy ones - is outages. Some part of an IT infrastructure, perhaps critical servers or the network, crashes and the whole service goes offline.
That's happened to Chime at least once, in October 2019, and resulted in some negative publicity. "Fortune" magazine ran the headline in December that year, "What Went Wrong at Chime? How Rapid Growth Became Its Own Challenge At One 'Challenger' Bank."
What had gone wrong was a complete outage that left customers unable to make purchases, withdraw cash or use their Chime banking apps. At least one review on Trustpilot implies there has been another, more recent incident. But we're unable to verify that.
Of course, pretty much all banks have occasional outages. And we have no reason to think Chime is worse than others. But customers who rely on branchless banks may feel more isolated when they happen.
Is Chime Legit?
We can see zero reason to question Chime's legitimacy or bona fides. And there are many grounds for believing it's a sound and good company, including its:
- A+ BBB rating
- Partnership with established banks
- Small number of CFPB complaints
- Lack of lending products - It's unaffected by rising bankruptcies and increasing financial distress within the population
- Five-million-strong customer base - With new customers signing up at a rate of hundreds of thousands a month, according to the company
Why would anyone question its credentials?
What We Think About Chime
So what have we concluded? Well, the more we've uncovered about Chime, the more we've grown to like it.
Yes, your grandparents would have laughed at the idea that a 1% return was descriptive of "high yield savings accounts." But in the 2020s, it really is.
And they'd love Chime fees, which are as rare as old gas-guzzling Hummers at a green convention. Too many other banks seem to nickel-and-dime customers - at least, those who are other than wealthy.
Better yet, that feels part of something bigger: a real desire to have its customers' backs. Giving them access to their paychecks before most other banks, spotting them for small overdrafts and providing painless ways for them to save more all seem like things designed to benefit ordinary people.
Of course, Chime is an enterprise. And, no doubt, it offers those features because its marketing people know they'll appeal to many consumers. But what's wrong with that?