No matter how big or small your household budget is, you want to avoid being nickel and dimed by your bank.

Monthly maintenance fees, overdraft fees, minimum balance fees, paper statement fees — the list goes on and on.

$3 here and $5 there can add up quickly.

That’s why I was so intrigued by Chime Bank, an almost zero-fee online bank. Is it too good to be true, or can Chime Bank help you save money, automate your finances, and simplify your financial life?

Let’s find out with a full Chime Bank review. 

Chime Bank Review: Overview and Key Benefits

The banking industry has never had a sterling reputation when it comes to the way it treats customers. And after a recent series of scandals that included things like opening accounts for customers without their knowledge, improper foreclosures, and the not-so-small matter of its role in the 2008 financial collapse, that reputation has only gotten worse.

As a result, and understandably, many people have grown to deeply distrust the banking system. But the truth is that it’s difficult to navigate the modern world without a standard checking account, and trying to do so can be extremely expensive. A 2016 New York Times story titled “The Unbanked” notes that customers without bank accounts typically pay anywhere from 3% to 15% for financial transactions (like cashing a check) that would be free for account holders.

Enter companies like Chime Bank, which aim to offer lower-cost, easier-access banking solutions by leveraging technology.

One of the most notable aspects of Chime is that unlike the big banks that charge tons of fees (often to the customers who can least afford them), it charges almost no fees at all.

That’s made possible in part by the fact that Chime is an online-only bank. That means there are no brick-and-mortar locations, which results in lower overhead and big savings that can be passed on to customers.

Chime offers free checking and savings accounts, free money (more on that later), and even early access to your paycheck. It also offers two valuable savings tools — round ups and automated saving — that can help you meet your goals and get (or keep) your finances on the right track.

Chime Bank

How It Works: Chime Bank Checking Account

Chime’s checking accounts are called “spending accounts,” which makes sense since debit cards (most people’s preferred spending method) draw from checking accounts. There’s no minimum balance requirement for a Chime spending account.

Direct Deposit

You’ll have a standard routing and account number (just like with a traditional checking account), so you can easily add money to your spending account via direct deposit.

However, unlike with traditional accounts, direct deposits into your Chime spending account are processed immediately — not held for a period of time (usually one day) as is the practice at many other banks. Additionally, Chime customers have access to their direct deposit up to two days “early.”

Here’s how early deposits work, according to Chime:

When your employer processes payroll, they submit files to the Federal Reserve notifying them how much each employee will be paid that week. The Federal Reserve sends that information to us every day to let us know how much and when you’ll be paid. Instead of waiting until your payday to deposit the funds, we make that money available as soon as we receive the notification.

There is no fee for this service, which makes it a great benefit — especially if used as an alternative to payday loans, which often come with a double or triple-digit interest rate.

Chime Bank Debit Card

When you open a Chime spending account, you’ll receive a Chime Visa Debit Card in the mail. The card is linked to your spending account, and is accepted anywhere Visa is accepted. The debit card will also act as your ATM card.

Once you receive the card, call the toll free number to activate it. During this call, you’ll be given the routing and account numbers for your spending account.

ATM Access

I know what you’re thinking, because I thought it too: if Chime has no physical locations, where do you go to take out cash? Fortunately, Chime has partnered with the MoneyPass ATM network, and you can use any of their more than 38,000 locations free of charge. You can use the ATM Finder feature in the Chime app to find the closest location. (The app is available for both iOS and Android devices.)

Depositing Cash

If you need to deposit cash into your Chime account, you can do so at more than 60,000 retail locations, including 7-Eleven, CVS, Walgreens and Walmart (or any other store within the Green Dot network).

Paper Checks

Depositing paper checks: Of all the banking innovations we’ve seen in the past decade, mobile check deposit is my favorite. Most of us don’t deal with very many paper checks, but on the rare occasions when we do, it’s nice to be able to deposit them from our kitchen table via a smartphone (rather than having to trudge to an ATM or physical bank location).

Unfortunately, Chime’s mobile deposit feature is only available to customers who are enrolled in direct deposit and have incoming transfers of $200 or more per month. If you qualify based on that criteria, you’ll also have to wait 30 days for the feature to be enabled. This could be a major drawback for some customers. Since Chime does not accept deposits via ATM, you may find that you still have to go to a bank (and pay a fee) to cash your paper checks.

Paying with paper checks: There aren’t many situations that require payment by check, but if you need to send one, you can do so using the Chime Checkbook feature. Just fill out the information for the recipient of the check and Chime will mail it anywhere within the United States. It typically takes three to nine business days for the check to arrive, so don’t wait until the last minute. This service is free, but note that there’s a maximum amount of $5,000 per check.

How It Works: Chime Bank Savings Account

You don’t have to open a Chime savings account alongside your spending account, but customers who do will score some valuable perks.

Round-Ups

Chime Round UpsEven if you practice frugal living, saving money can be a struggle. One of the best ways to save money is through automation. Automating your saving habits will enable you to save money before you ever have the chance to spend it. That’s exactly what micro-investing apps like Acorns and M1 Finance do, and it’s what Chime’s Round-Up feature does. For a similar product, check out my Digit review.

When you turn on the Round-Up feature, each purchase you make using your Chime Visa Debit Card will be rounded up to the nearest dollar. The money is then transferred from your spending account to your savings account when the transaction settles, which is usually one day after it’s made. So, if you spend $14.20 with your Chime debit card at a gas station on Monday, 80 cents will be deposited into your savings account on Tuesday.  

There’s no cap to the number of Round-Ups you can utilize; the more you use your Chime card to pay, the more you’ll save. This feature can be toggled on and off at any time.

Automatic Savings

Chime - Automatic SavingsRound-Ups are great, but if you really want to make an impact on your savings you’ll want to open a Chime spending account

With Automatic Savings, you can opt to have 10% of your direct deposits transferred into your Chime Savings account.

This can be a real game-changer for those who struggle to save money. However, Chime currently only allows a 10% transfer. In other words, you can’t customize the percentage. If you want to save 5% or 15% of each direct deposit, you’re out of luck.

Given that, I think this feature is most useful for those looking to build an emergency fund. Having 10% of your income withdrawn automatically and forcing yourself to live off the money in your checking account is a good psychological trick.

This automatic 10% transfer is also useful for saving for short-term goals, like a vacation in a few months, a new car, or a down payment on a house.

Fees

Chime is essentially a fee-free bank. It doesn’t charge minimum balance fees, monthly fees for “account maintenance,” or overdraft fees. However, Chime also doesn’t offer overdraft protection, so if you try to spend more than you have in your spending account, the transaction will decline. While this might be a bit embarrassing when it occurs, it will save you the pain of a $35 overdraft fee on what might have been a small transaction.

The only fee that Chime charges is easily avoidable. There’s a $2.50 fee for using an out-of-network ATM. Between the many ATM locations and the fact that you can get cash-back with your purchase at almost any retail store, you have tens of thousands of ways to avoid this fee. If you do incur this fee, Chime will pull the money from your spending account.

How does Chime make money if not by exploiting vulnerable customers with fees, fees, and more fees? The bank makes money through Visa. Every time you pay with your Chime Visa Debit Card, Chime earns a small amount on the transaction.

Chime Bank Pros and Cons

So how does Chime stack up as a competitor to traditional banks?

Pros:

  • Charges almost zero fees, and the one fee they do charge is easily avoidable.
  • Includes two valuable automated savings tools.
  • Provides a simple, clean, and easy-to-navigate user account interface.
  • Grants access to over 38,000 free ATMs.
  • Allows you to make cash deposits at many major retailers.
  • Offers early access to your direct deposits.
  • All accounts are FDIC insured, just like a standard bank.
  • Has zero foreign transaction fees.

If you ever travel outside the country, then you understand just how big of a deal that last bullet point is. Most credit cards (especially travel rewards credit cards) no longer charge a foreign transaction fee, but many traditional banks still charge between 1% and 3% for withdrawing funds from foreign ATMs (on top of the standard out-of-network fees). That can really add up and put a dent in your travel budget.

Notably, Chime doesn’t charge a foreign transaction fee on ATM withdrawals or purchases, which reduces your need to carry cash (which can get lost or stolen).

Cons:

Nothing is perfect, and Chime Bank does have a few drawbacks.

  • Chime pays a low 0.01% APY interest rate. While paltry, that’s in-line with most traditional banks.
  • There’s a $2.50 ATM fee for using out-of-network machines.
  • Mobile check deposit is only available to users with $200 or more per month in direct deposits.
  • Joint accounts are not supported, which means you cannot share an account with your child, spouse or partner.
  • The lack of physical locations may be a turn-off for some people. (Note that you can reach Chime’s customer service via phone, through the mobile app, or by email.)
  • Chime only offers two products: a checking (spending) account and savings account. There’s something to be said for developing a relationship with a bank, as it makes you more comfortable when you have other needs (like a personal loan, a CD, or a mortgage).

Chime Bank Review — Summary

Traditional banks have fee structures that are usually opaque and often predatory; they make billions of dollars every year on the backs of those who are the most financially vulnerable.

Overdraft fees are the most nefarious of the bunch. They can stack on top of each other for days at a time, making it even more difficult for people who are already underwater to bring their accounts back to positive. If those customers don’t get back in the black, their accounts are charged off to debt collectors, thus damaging their credit for the next seven years and potentially derailing their financial progress.

Even when fees are transparent, they’re regressive. A $25 monthly checking account fee is more burdensome for someone who makes $35,000 per year than for someone who makes $350,000 per year, but the former is the one who will get stuck with the fee, as higher-income customers almost always qualify for waivers.

That’s why I’m such a big fan of Chime Bank and other no-cost financial services providers. Chime gives people access to a real bank account and debit card — two increasingly indispensable tools — without outrageous fees or the risk of financial ruin. In fact, rather than setting its customers up for failure, it offers valuable tools designed to help them improve their financial situation.

The bottom line is this: Chime flips the traditional bank-client relationship on its head in a way that’s long overdue. It’s a quality, low-cost banking option without all the downsides that come along with a traditional financial institution.