If you've ever run into a situation with your bank where you were assessed an overdraft fee for an innocent mistake in balancing your checkbook, you'll appreciate a new bank called Chime Bank.
Chime believes that your bank shouldn't be making money off of your misfortune, and as such they charge no maintenance fees, no overdraft fees, and no bounced check fees. They even allow you to use over 24,000 ATMs for free.
But it doesn't stop there. Not only is Chime a fee free bank, it has a rewards program that gives you incentive to save.
So let's take a look at what Chime has to offer.
Chime Bank History
Chime Bank is a new company, co-founded by Chris Britt and Ryan King in 2013.The company has raised over $12 million in venture funding, and as of this year has started to accelerate adding new users.
Chime's banking partner is the Bancorp Bank. Bancorp Bank provides private label banking solutions to a lot of banks like Chime, Simple and others. They provide the banking back end, while the front end brand, presence and software is created and maintained by Chime.
The company was founded with the idea of empowering people to make better financial choices. From their about us page:
We created Chime for one very powerful reason: to empower people to lead healthier financial lives. Sounds simple, right? But it isn’t. Managing money is hard, and too often banks aren’t making it easier. At Chime we’re dedicated to building a new kind of bank account that helps members get ahead by making the hard parts of managing money easy. How do we do this? By eliminating unnecessary fees and creating a service that puts members in control, helps them form healthy habits, and empowers their financial well-being.
Most bank accounts cost you money. We designed Chime differently, with a business model that doesn’t rely on fees to make a profit. Instead, Chime earns a small sum from Visa on Chime card transactions. So the more members spend, the more money we make. We share some of those earnings with our members so that the more you use your card, the more money you save. It’s a win-win.
Chime was founded to help encourage you to make better choices like saving more, and to reward you for doing so. So let's take a look at how Chime does that.
Signing Up For Chime (Get A $5 Bonus)
- First, Go to ChimeBank.com via this invite link, and enter your full name, email address and a password.
- Next, enter the rest of your requested details.
- Link your existing checking account or setup a direct deposit to Chime.
Once you've setup your account it's time to let Chime start working.
Chime Spending And Savings Accounts
So how does Chime work?
When you sign up for a Chime spending account you'll receive a Chime Visa® Debit Card that you can use wherever credit cards are accepted. The debit card is linked to your Chime “spending account” (A spending account is like a checking account – but who uses checks anymore?).
If you want you can also open a savings account, which is needed if you want to enroll in their “Automatic Savings” rewards program (Trust me, you do. We'll talk more about that below).
Safe and Secure
The Chime Bank account is FDIC insured up to $250,000 through their banking partner The Bancorp Bank, and your account comes with the Visa Zero liability policy for any unauthorized purchase. While they don't currently use chip cards, they do say they're looking at that for the future.
Easy Direct Deposit or Transfers
To fund your account you can easily setup direct deposit of your paycheck when you signup. Simply provide your Chime Bank routing number and spending account number to your employer or payroll provider and they'll set it up to fund your account automatically when your paycheck comes through.
If you prefer you can also initiate a transfer from an existing external bank account to be sent to your Chime Bank account. If you initiate a transfer from your Chime Bank account, there are limits of $200 daily or $1,000/month, so transferring from the external bank is probably preferable.
Fee Free Account
Chime Bank accounts are as free of fees as you can get. They charge no maintenance fees, no overdraft fees, and no bounced check fees. Banks in the U.S make billions off of fees every year, in fact Americans paid $33 billion in overdraft fees last year! One study of U.S. Bank fees found that the average annual fees for an account holder was about $290. By not having fees like the ones mentioned, you're already ahead of the game.
The things you will pay for with Chime are very standard charges. There's a $2.50 out of network ATM fee, a 3% transaction fee if you use the card outside the US, and a 3% external debit charge (when you load your account via debit instead of a direct transfer). That's it.
Using Chime Via Mobile
Chime works well on both desktop and Mobile, but since the bank is optimized for millennials, it works the best on your smartphone, either iOS or Android. The app has mobile notifications setup so that you can get daily balance notifications, as well as real time notifications of spending on your account.
You can also use the app to find local ATM locations, and to get instant cash back at some retailers.
You can also block your card temporarily in the app if you've misplaced it.
Automated Savings Rewards Program
One of the most exciting features of a Chime account is the automatic savings component of the account. So how does it work?
When you use Chime Bank card they will round up every transaction to the nearest dollar, and put the money aside in the savings account for you.
At the end of the week on Friday they'll add a 10% reward to whatever money you put aside, up to $500 per year.
While the savings account has a minimal .01% APR, the rewards and automation of savings go a long way to making up for it.
So if you do a transaction for $1.55, it will round it up to $2 and put .45 cents in your savings account. Then at the end of the week, if you've had $50 in round-up savings, it will give you a $5 bonus!
Chime Bank: Give Your Savings A Bump
Chime is an interesting new banking option, that could be useful for a lot of people. I'm a big fan of products that take important ideas – like saving for the future – and make them easier and more automatic.
With the automatic savings program Chime makes saving money pain free and easy. In addition, they make it even more rewarding by giving you a bonus on all the round-up savings you've made. Yes, it's in their best interest as well since they make money on those Chime Card transactions, but they're sharing that money with you via the rewards.
Is Chime for everyone? Maybe not. They do have some limitations at this point including lower limits on transfers initiated from your Chime account, limits on transaction amounts for the Chime Checkbook ($5,000/transaction or $10,000 per month), and the inability to deposit a paper check via the app (although they're looking at adding this). They also don't do joint accounts currently. If you can get beyond those things, however, I'd recommend giving Chime Bank a try.
What have you got to lose? It's free – and if you sign up now through the Bible Money Matters link below, you'll get a $5 opening deposit!