A Deep Dive into Chime, is it the Right Fit for Your Finances?

With complex banking options offered to consumers, Chime makes it simple for anyone to safely keep track of their finances, with simple, straightforward functions anybody can use.

(Image credit: Chime.com)

What is Chime?

Chime is a simple app that allows its users to create checking and savings accounts, as well as offering a debit card in partnership with Visa. Instead of charging account fees, Chime makes money by taking a portion of the transaction fees that Visa charges merchants when customers use Chime’s debit card. Chime offers customers the option to get paychecks directly deposited two days early and offers two automatic saving features, one that lets customers round up debit-card payments to the nearest dollar, sending the rounded amount to their savings account, while the other automatically directs a percentage of each paycheck to a savings account. Another feature Chime offers to customers who directly deposit $500 or more a month is a $100 fee-free over drafting.

(Image credit: Chime.com)

Chime Checking/Spending Account Key Takeaways

Chime’s checking account, known as a Spending Account, charges no monthly account fees and doesn’t require a minimum balance. It offers a program that accelerates your direct deposits, making them available up to two days early. If you receive direct deposits of at least $500 each month, you can enroll in Chime’s SpotMe service. This optional service allows you to overdraw your account by up to $20 on debit card purchases without a fee. Chime can increase your SpotMe allowance up to $200 at its discretion based on your account history.

(Image credit: carapalmer.com)

Chime Savings Account Key Takeaways

Chime’s high-yield savings account offers an 0.50% APY. It doesn’t charge monthly fees or requires a minimum balance. There is no cap on the amount of interest you can earn and, as long as you have at least a penny in your account, you’ll earn interest. There is no minimum deposit to open an account, but you must have a Chime Spending Account in order to open a Chime Savings Account.

Chime has two optional programs to make saving money easier. The “Save When You Spend” feature allows you to save small amounts when you make purchases. Whenever you use your Chime debit card, Chime rounds the transaction up to the nearest dollar and transfers the difference to your Savings Account. Chime also offers a “Save When I Get Paid” feature that allows you to set up a recurring transfer of 10% of your direct deposit paycheck of $500 or more from your Spending Account to your Savings Account each time you get paid.

Why Chime is Technically Not a Bank

Becoming a formal bank is a complicated process in the United States due to U.S. financial regulations. This means that Chime, like many online banking apps and sites, is not technically a bank. Instead, the services Chime offers to its customers are handled by two small banks, The Bancorp Bank and Stride Bank, neither of which is publicly traded. This type of fintech startup, which provides online-only banking services, is called a “neo-bank” or “challenger bank.”

Key Statistics About Chime:

• As of February 2020, Chime had 8 million accounts, up from 6.5 million a few months earlier in December 2019.

  • It is important to note that some customers have multiple accounts (savings/checking) and that some of these accounts may be inactive or used sparingly.

• According to Crunchbase, Chime has raised $1.5 billion dollars over 8 funding rounds, the most recent of which was on September 18, 2020. As of that latest fundraising round, Chime was valued at $14.5 billion.

• Chime was founded in 2013 and offered to consumers in 2014.

• Chime was Co-founded by Chris Britt, current CEO, and Ryan King, current CTO.

  • Britt previously worked at Visa and at Greendot, a financial services company that offers prepaid, reloadable debit cards.

  • King worked at now-defunct online address-book firm Plaxo and Comcast.

Bottom Line

If you are looking for a simple app that makes keeping track of your spending easy hassle-free, then Chime is for you. With straightforward features that anyone can take advantage of, observing your finance has never been easier.