Do you have a “free” checking or savings account at one of the big banks? If you’re a financial boy scout or girl scout, the account is truly free to you. But someone who is a financial wreck is subsidizing you. If you’ve ever overdrafted on your account, the $35 per day overdraft charge proves just how “free” your account really is.
Big banks collect big money from overdraft fees, account minimum fees, and bounced check fees. All these fees make it even more difficult to break out from the paycheck to paycheck trap that ensnares so many young people.
But not every bank abides by this philosophy. Chime, a mobile forward, deposit and savings institution is making money management and savings easier. This is how they’re doing it.
Like many internet banks, Chime keeps their costs low by investing heavily in technology and eliminating brick and mortar outlets. However, they’ve also had the foresight to focus on their mobile platform. Recently, they’ve been featured by Apple as one of the top money management apps.
The app makes it incredibly easy to set up direct deposit, to transfer money among your accounts, find an ATM and review your recent transactions.
The app is responsive, intuitive, and it has the information you need. You can see recent transactions, account balances, how to find an ATM, and your linked account balances. It’s easy to pay a bill or transfer money right in the app.
Easy to use interface
Easy to set up direct deposit
Chime’s fee schedule is 4 lines long. There are no maintenance fees, overdraft fees, foreign transaction fees, bounced check fees. You can even use MoneyPass to have access to more 24,000 ATMs for free.
You will pay $2.50 to use an out of network ATM and a 3% external debit charge (when you load your account via debit instead of a direct transfer). That’s it.
Chime is as close to a Fee Free account as you can get. They take pride in aligning their business profits with their members needs. If you join Chime, you can expect transparency and a bank account with no fine print.
Make Saving Simple (and Rewarding)
In addition to keeping the fees out of banking, Chime allows you to set up an automatic savings program.
The bank rounds up each transaction to the nearest dollar, and sets the money into a savings account. They also add a 10% reward to the money you set aside- up to $500 per year. The savings account yields a paltry .01%, but the rewards and automation more than make up for it.
If you’re struggling to save for a rainy day, a behavioral tool like Chime Automatic Savings can be a perfect solution. You can always access the money or transfer it back to your spending account, but mentally separating it is an easy solution to a savings problem.
But Will it Meet My Needs?
If you have straightforward banking needs, Chime is an excellent bank for you. It’s fee free. It’s got a built in savings tool. You can spend money with a visa debit card, pay bills via the mobile Chime Checkbook.
The beauty of Chime is in its simplicity. It’s easy to see how fee savings and extra savings from their program offset their paltry .01% interest rate.
However, the simplicity has some drawbacks.
The Chime Checkbook only allows $5000 in a single transaction but otherwise, there is no limit to how many checks you can send per day. Lump sum expenses like a rental deposit (first, last and security deposit) typically requires a big check, and $5000 might not cut it.
Chime also doesn’t yet have the option to deposit paper checks (which is a bummer, as many banks currently allow this by taking a picture on your phone). This is a feature that they plan to release soon. To deposit cash, you need to go to a Green Dot location. Anyone who deals in the cash economy should consider another bank.
Finally, Chime is not set up for joint account holders. If you and your spouse want to share a checking account, Chime isn’t a good option right now.
With these drawbacks, we can't rate Chime that highly today, but it shows promise for the future.
I’m excited to see how Chime will grow and transform in the coming years. Their commitment to fee free banking represents a needed change in the marketplace. Hopefully, Chime will come up with even more ways to expand their product to people who need it.