If you’ve spent time looking into various savings and investment services online recently, you may well have come across a service called Chime.
Chime appears to be moving into the online banking space occupied by the likes of Wise and Netspend. Chime isn’t actually a bank as-is, but it does still offer a variety of banking and money transfer services that can help save you time and money.
If you’re considering using Chime for the first time, or simply want to know what the hubbub is all about, here’s my quick guide to what the service offers, and whether or not it’s right for your banking needs moving forward.
What is Chime?
Chime is the name of a US fintech company that’s built on principles of simple banking. They claim that they want to make banking helpful and free to use.
In fact, the online banking services they offer seem to have picked up popularity largely thanks to their lack of fees you’d expect to pay elsewhere.
Chime actually started up back in 2013, but with the rise of other bank-free financial services such as Wise growing in popularity, the service has seen a recent upsurge.
Chime isn’t a bank – it’s a financial service provider. It handles your money in a similar fashion to a traditional bank, but does so completely online.
You can use cards, withdraw from ATMs, make checking transfers, and even use overdraft features. One of the leading selling points of Chime, too, is the direct-deposit feature of their checking accounts, which allows users to receive payments up to two days earlier than expected.
How does Chime work?
Chime is essentially an online bank in all but technicality. Chime offers both checking and savings accounts, and a credit builder secured Visa card.
Chime partners with regional banks so that they can provide financial services to their online customers. They’re fully regulated through partnering with banks insured by the FDIC, and there’s an extensive list of regulations and statutes that the company abides by.
Chime cards – credit or debit – work much in the same way you’d expect typical cards attached to your bank to. Simply make deposits into your unique checking or savings account, make transfers when logged into your online account, and grow money at a rate of around 2% APY (annual percentage yield).
The company claims to offer the “most loved” banking app – to the point where they’ve even trademarked the phrase! It seems to have a strong following online, with the vast majority of reviews skewing towards being highly positive.
However, as you’d expect, it’s up against some stiff competition. People seem to value Chime for its ease of use via app, which allows them to make quick transfers to friends and family without fees up to a point.
Therefore, even though Chime isn’t technically a bank – and doesn’t hide this fact – it’s purely a financial services provider, and you don’t need to pass a credit check to sign up.
What services does Chime offer?
Chime offers three main services – checking accounts, savings accounts, and credit cards.
Chime’s checking accounts offer users fee-free overdrafts up to $200, though terms and conditions apply – so, as always, it’s wise to check the fine print before getting started.
Chime members have access to a Visa debit card, too, which they can use at more than 60,000+ ATM locations across the US.
Chime’s savings account service allows users to save money on an automated basis, taking the hassle out of having to manually manage when and where funds transfer across.
Those users who use apps for banking more than cards, too, can also integrate Chime with Google Pay and Apple Pay, meaning it’s easy to link the two systems together.
Chime’s services compete well in the US, but with “neo banking” already seeing a sharp rise in popularity elsewhere in Europe and the east, it’ll remain to be seen if it can become and stay the market leader. It’s a financial technology company that’s part of a global new crop of such fintech firms.
Chime’s simple variety of online banking services and ease of use, most of all, appeal to those who want to keep banking convenient. It’ll also appeal to people who want to build up positive credit histories without having to leap through various hoops to get there.
What’s probably the biggest driver of interest in Chime, however, is its focus on keeping fees low, or in some cases, even non-existent.
How much does it cost to use Chime?
Chime offers a variety of free banking services, such as its $200 overdraft, friends and family transfers (up to a monthly cap – terms and conditions apply), and withdrawals at participating ATMs.
Chime will also replace debit cards for free if lost or stolen (and you can also cancel transactions immediately if you report to Chime as soon as possible).
Chime’s savings account doesn’t carry monthly fees and there’s no need for an opening deposit. Given that some savings accounts elsewhere demand up to $100 upfront just to open and establish, this helps to break down barriers to many would-be savers.
Chime largely makes money through transaction fees. That means it typically takes a small portion of fees through card transactions when you use it with merchants.
You may face cash withdrawal fees in some cases, depending on the ATM you use. Any ATMs outside of Chime’s core network may charge $2.50 per transaction, for example.
What sets Chime apart from its competitors is the fact that it’s refreshingly open about costs as well as being fairly anti-fee in general. The company’s committed to avoiding “hidden” charges so that their users can rest easy about using their products.
What is Chime’s bank name?
As per Chime’s website, their banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A. Technically speaking, as Chime isn’t a bank, it doesn’t have a bank name. Chime is a financial technology firm that works with regional banks to provide a regulated, insured online service to its customers.
Chime’s Visa debit cards are also issued by one of either Bancorp Bank or Stride Bank. If you want to send or receive money from someone using Chime, ask them to check their specific bank account details in the app or the website.
Are there any downsides to using Chime?
While Chime’s fee-free and accessible banking service strikes positive chords with many people, there are a couple of drawbacks you may wish to consider before setting up an account with the service for the first time.
For example, you may face some charges if you make cash deposits, and you may have to sign up for direct deposit if you want to deposit via mobile. However, these are both issues that should be fairly simple to overcome.
That said, Chime has faced controversy in recent years over closing down customer accounts. The service can close accounts if it deems necessary, such as if it requires additional identification. This has led to some controversial press about closure policy, though positive experiences far outweigh the negatives.
How to deposit money into a Chime account
To deposit money into Chime, you’ll need to find a partner location – these are typically CVS stores, Walgreens, Walmarts, 7-Elevens, and more. You can find your nearest partner deposit location within the Chime app itself.
When depositing at Walgreens (as an example), you simply need to hand your Chime debit card and the money you’d like to deposit with the cashier. You can do this up to three times a day, up to the value of $1,000 total, and up to $10,000 each calendar month.
Keep in mind, however, that you may face charges to deposit if you visit a partner location that isn’t a Walgreens. The process is generally the same as you’d expect at Walgreens – just have cash and your card available to make the deposit.
At this time, you won’t be able to make deposits into Chime using an ATM – you can only do so via cashier inside a partner store.
Does Zelle work with Chime?
At the time of writing, it seems that Zelle functionality with Chime is no longer available. There’s no confirmation of such a partnership or connection through Chime’s website and similarly Zelle’s website does not list Chime as a partner. Any sources that do suggest Zelle can be used alongside Chime are fairly outdated.
The most recent advice I’ve sourced online is that Chime no longer authorizes Zelle connections. That means you’ll need to use the “Pay Anyone” service available through Chime directly.
Thankfully, this service is just as quick and convenient to use as Zelle in many ways, meaning the adjustment may not be so much of a bind!
How do I transfer money from Cash App to Chime?
You can’t transfer money directly from Cash App to Chime via any in-app features – but you can hypothetically use a workaround to physically transfer money from one to the other.
This means you’d have to transfer money from Cash App to a physical bank account, if you have one, and then transfer said funds to Chime by paying over the counter (as detailed above).
There are a few misleading guides out there that suggest you can transfer from Cash App to Chime in other ways. Do always take them with a pinch of salt!
What is SpotMe on Chime?
Chime’s SpotMe feature helps users to make payments and other transactions even if they’re over their checking account limits. It’s basically an overdraft feature provided by Chime to its customers. The good news is that signing up for SpotMe does not require a credit check. The other great news is that Chime does not charge any interest on your SpotMe balance, which mean it’s a great way to borrow some cash quick.
Provided you have a valid debit card, and you meet the eligibility requirements set by Chime, SpotMe allows you to withdraw up to an extra $20 if you need the extra cash boost.
SpotMe on Chime is free to use, and there are no fees applied. What you’ll need to look out for is whether or not your account history is in good standing. You’ll also need to ensure that you’ve deposited at least $200 per month in the previous few months.
The great news with this feature is that you may even be able to increase the amount of overdraft at a later date. Chime uses its fancy algos which look at a user’s financial history to make this decision. If Chime views your activity in a favourable light, you may be eligible to go up to an overdraft limit of up to $200. However, many users are likely to find the ability to “go over” by $20 a handy proposition if they’re in a tight spot.
SpotMe also has certain enhancements like “Boost” and “Bonus” which periodically allow you to get some extra overdraft limits or even to share it with a friend.
SpotMe is not available for certain the following types of transactions:
- Pay Friends
- Split Bill
- Chime Checkbook
- ACH transfers (including direct debits)
- Transfers to your Chime savings account (“Chime Savings Account”).
Chime will decline these transactions if there are insufficient funds in your Chime Checking Account.As always, it’s worth reading the full terms and conditions of the service, as this is just a quick overview. Remember, too, that you’ll need a debit card to benefit, and you may not be able to access SpotMe as a new customer right away.
Is Chime FDIC insured?
Yes, but indirectly. As Chime actually stores funds at their partner banks, in this case The Bancorp Bank and Stride Bank, the good news is that your money with Chime is FDIC insured. This means that their protection through the FDIC means that customer accounts are insured by up to $250,000.
Is Chime Safe?
From a financial perspective as Chime operates with FDIC-insured partner banks, it’s safe to say that your money is covered up to that threshold. This makes it safe to use.
From a modern technology perspective, I believe Chime should be very safe to use. Chime claims that they use the industry standard security frameworks, operate on industry-leading infrastructure, and have a team of experts constantly working to monitor and improve safety.
What’s interesting is that they also have a bug bounty program, something that I haven’t seen with any other firm in all these years. Chime has paid out $69,450 in bounties to security researchers, so it tells me that their service has been tested and probed thoroughly by external experts.
So if you’re wondering whether Chime can be trusted or whether Chime is legit, the answer for me is Yes.
Is Chime a better alternative to PayPal?
For many people, Chime is likely to hold benefits over PayPal. For example, its low fee structure and ease of use may appeal to those who have struggled to manage their money with PayPal online in the past.
However, in some ways, PayPal has the upper hand. You can directly fund PayPal online and in-app through various different banks, providing you pass ID checks, for example. PayPal is also widely accepted across thousands of different merchant services.
Ultimately, you may find that PayPal and Chime work well in different ways and for different types of payments!
Is Chime only available in the USA?
At the time of publication, yes – Chime is only available for users in the USA. However, there are alternative “neo banks,” such as Wise, which are available to European users, for example.
Does chime work in the UK?
No, unfortunately Chime will not work in the UK. If you’re an American who is traveling or moving to the UK, I highly recommend checking out Wise. You can get more details in our review article on Wise.