At the time of this article, the coronavirus pandemic is impacting American life by forcing many more people to fully embrace technology to do simple tasks that we’ve taken for granted, such as banking.
But, one bank has apparently been made for times like these. That’s the Chime Banking mobile app. But, does Chime banking work? Is this a trustworthy platform for normal everyday banking?
That’s what this article is about. Hopefully, by the end of this article you will have an understanding of what Chime is (and isn’t) and if it will work for your situation.
Full disclosure, I’m a Chime member, so I can give you my firsthand account of my experiences and headaches with the service.
Chime. Is it a bank or app? What is it?
THE BANKS AND THEIR ACCOUNTS
With these banks, Chime members (the name of their customers) use a deposit account that’s backed by Bancorp and Stride.
I will get more into the types of accounts and features that you get with your membership later. But, what you need to know is that the account is a real account and you’re insured up to $250,000 per account.
What’s interesting about Bancorp and Stride is that these two banks are involved in many non-traditional banking and payment projects.
For example, Bancorp Bank works with technology companies such as Google, Apple, and PayPal to develop innovations in payment technology.
As for Stride, they have a division that offers payment solutions that helps with transactions, among other things.
THE MOBILE APP
With traditional banks, they will allow you to perform online and mobile banking through an app. They also have a physical location that you can visit to utilize their services. That’s not the case with Chime.
Chime is just an account. But, you use the Chime App to manage the account, without having to visit a physical location. The app itself is free to download from Google or Apple’s app store.
The app is used to check your balance, make deposits, speak to customer service, access your account information, and more. It’s like having a physical bank in your pocket.
Chime comes with a host of features for members. There are so many features that I could spend all day laying them all out. In this section, I’ll just focus on some main ones.
Chime gives you a spending account and an optional savings account. You access funds from the account through a Visa debit card which you can take to an ATM to get cash or just use it like a normal debit card.
- Spending (Debit) Account: The spending account is similar to any other checking account you get at a standard bank. The account FDIC insured, you get a Visa Debit card, you can send physical checks to people, and you can perform electronic fund transfers (EFT) with the given checking account number and routing number. You can also deposit money into your account. All of this can be done at no additional cost.
- Savings Account (Save-as-you-Go): The savings account is about like any other savings account you get at any other bank. As of this article, I’m earning 0.06% APY (annual percentage yield) on my account. What’s unique about the savings account is that you can automatically have 10% of your paycheck go into your savings account. The account also works like the Acorns or Digit apps. It can round up your debit card purchases and automatically deposit them into your savings account. You’ll save money without thinking about it. Also, there’s not a fee for holding the account.
- Connect Your Current Bank Account: Chime also allows you to connect securely with your current brick-and-mortar bank. You can transfer money between that bank and your Chime account and monitor how much you have in your bank’s account.
VISA DEBIT CARD & PARTNER ATMs
Chime will give you a Visa Debit Card that you can use to access your funds. Also, Chime has partnered with banks across the country that will allow you to make withdrawals from your spending account for free.
MOBILE CHECK DEPOSITS & EARLY PAYCHECK DEPOSITS (up to 2 days in advance)
You can use the Chime App to perform a mobile check deposit. All you need is a smartphone with a camera.
At the time of this article, Chime will accept 3 types of checks: Treasury Department checks (I assume because of the coronavirus stimulus checks), payroll checks, and checking account checks.
Chime can also accept direct deposits of your payroll check from your employer. Chime will give you a form that you can print and take to your employer to set up your direct deposits.
When you set this up, then you can actually get paid up to 2 days earlier from your employer.
BANKING WITHOUT FEES (including Overdraft)
PLEASE READ THIS PART CAREFULLY! CHIME DOES HAVE FEES. But, what’s unique about Chime is that unlike a typical brick-and-mortar bank, they don’t rely on fees to make money.
What does that mean??
Chime charges a small fee for using ATMs outside of their network. They also make some money from people using the debit card (don’t worry, they don’t tack on extra charges for running your card. Refer to FAQ “How does Chime make money?”).
Outside of that, there is no fee for opening an account, for minimum balances, to replace a lost card, and for overdrafts. They even partner with SpotMe to offer free overdraft protection up to $100 (certain restrictions apply).
If you’re familiar with the Earnin App, SpotMe works kind of the same way. Once you make up your negative amount, you can give a “tip” which can be used to help someone else get out of the red.
3 things to watch out for with Chime
I’m starting with the negative because if you’re doing research on something online; trying to decide if it’s worth the time and money, then you’re often looking for the negative reviews.
So, let’s rip the band-aid off!
As I said earlier, I am a Chime member. But, I’ve had some headaches with this service. After all, it’s still a bank.
There are many headaches, but I’ll list the top three with me.
Warning #1: Poor Customer Service & Ticketing Platform
It’s unfortunate to say that their customer service is almost like PayPal. If you’ve ever had the misfortune of using PayPal’s customer service, then you know that you can make more progress by talking to a brick wall.
The Chime app does have a help desk ticketing system that has real people on the other end.
But, you don’t have a number to call. It’s all like texting or talking through chat.
I had an experience when I was trying to get information about why a mobile check I deposited didn’t work.
I was going to try to deposit it through an ATM. All I wanted to know was if the check would still end up in my account even after Chime said I couldn’t try to re-upload the check again.
The response I got back was long and it read like stereo instructions. All I needed was a simple “yes” or “no.” They couldn’t do that.
I had to just deposit it into my account at a typical bank.
So, if you use their help/customer service feature, get ready for an adventure.
Warning #2: Savings Account Withdrawal Limits
Thank goodness I’ve yet to meet this limit in the 5+ months I’ve been with them, but it’s something that concerns me. At the brick-and-mortar bank I’ve used for almost a decade, they have charged me ridiculous amounts of fees over the years.
But, never have they placed limits on how many times I could make withdrawals from my savings account.
You get 5 withdrawals from your savings account to your spending account per month. After that… you’re on your own.
For budgeting sake and sound financial management, you aren’t supposed to make repeated withdrawals from your savings account anyway. That money is mainly for real emergencies.
However, just knowing that you have a limit on your savings account withdrawals can be an unnecessary stressor.
Also, if you use the Earnin App, get ready to say goodbye to it. Chime’s account is incompatible with Earnin.
Warning #3: Cumbersome Money Deposits
Chime is all online. Chime is all online. CHIME IS ALL ONLINE. Why did I say this 3 times? Because, I want you to understand that Chime is all online.
Therefore, if you need to make a deposit to your account, even though you can use a participating bank’s ATM, it doesn’t mean you can use that participating bank to deposit money.
You can get cash deposited into your account.
The catch is that you’d have to go to a store that handles GreenDot cash deposits (typically Walgreens, Dollar General, some gas stations). I had to do this once at a Dollar General.
It was fine, but I was a little nervous about handing the cashier $200 cash to deposit into my account.
Also, there’s a fee, so you’d have to pay a fee plus your deposit in order to put cash into your account (the bright side is that the deposit is instant).
You can transfer money between friends like the Cash App, PayPal, or Venmo. But, you can only do it if they also have a Chime account. If they don’t, then they will be invited to become a Chime member and open an account.
3 reason why you should consider Chime
All the negative aspects aside from Chime, there’s a lot of good reasons why you should consider Chime for banking. I will list the top 3 that pulled me in.
Advantage #1: No Fee Drama (Especially Overdrafts)
The best thing about Chime, to me, is that their business model reflects their philosophy that everyone deserves financial peace of mind. It’s a philosophy that’s important to me and the purpose behind this website.
I left my brick-and-mortar bank that I’ve been with for over a decade because overdraft fees put me in the negative with them by more than $200. And this wasn’t the first time that this has happened.
What made it worse is that, even though I’m fortunate to have a job during this pandemic crisis, they quietly closed my account and sent it to a debt collector.
What if I was laid off? What if I couldn’t make up that payment?
Also, while other institutions (EVEN SOME CREDIT CARD COMPANIES) offered coronavirus debt relief and pledged to not allow their customers to use their stimulus money to pay them off, my brick-and-mortar bank was going to profit off of it anyway.
According to Chime, among the top 5 banks in America, Americans pay $329 in overdraft fees annually. Those fees go to profit for the banks and it helps their CEO’s make 455 times more than the average U.S. worker’s salary.
When you pay an overdraft fee, you’re paying the bank CEO’s salary.
Think about that.
And also, you have no say whether you want your money to be overdrafted or not.
Chime does have some fees and, yes, they are a business. Businesses have to make money somehow. But, Chime doesn’t do it at the expense of their customers.
You can really tell that they genuinely care about helping people be in a better financial situation.
Advantage #2: Mobile App, Services, & Secruity
The mobile app is extremely user-friendly.
I know I complained about my customer service experience with them, but their technology is so good that I rarely have to use their customer service (… but Chime reps, if you’re reading this, don’t skimp on customer service).
The app uses similar, but more powerful, features that you can get with a typical banking app from a brick-and-mortar bank. They have improved their mobile check deposits system.
Also, the app uses the same security features as a brick-and-mortar bank (see security FAQ tab).
I recently took a trip to Washington, D.C. and I made a purchase with my Chime Visa card.
But, the purchase didn’t go through.
I instantly received a text from Chime saying that they believed that my card might’ve been stolen and wanted to confirm that I was making the purchase.
The confirmation process was as simple as clicking the confirmation link in the text. Instantly, I was able to make my purchase.
These people have thought of just about everything in designing the app and connecting it with the card. Not to mention the daily text updates of my balance and notifications every time I make a transaction.
Plus, the balance is INSTANTLY updated, so you always have an idea of how much is in your account.
Advantage #3: Wealth Building Features
I think one of the best things about Chime is that they really want to help you financially. They give you the tools to help you manage and save your money.
Currently, I don’t have SpotMe on my account for overdraft protection. It’s a personal preference of mine because I feel that having a negative balance in a personal finance spending account makes no sense. If you don’t have the money, you don’t have the money.
It’s that simple.
Besides, creditors generally will notify you if something went wrong on a payment. When they do, I find that if you’re honest and explain the situation, they will find a way to work with you without hurting your financial record.
With Chime, I actually have a choice to bank how I want to bank. If I want to have overdraft activated, I can.
They also provide wealth building features like the “round-up” savings (save-as-you-spend), automatic 10% savings account withdrawals, and they’ve recently created a credit building secured credit card.
And, even though I complained about limits on savings withdrawals, it’s actually forced me be more conscious about my spending habits.
Plus, who wouldn’t want their paycheck two days sooner?
Conclusion: Is Chime worth the time?
I personally love my Chime banking account. Does it have drawbacks, yes. But, Chime has ways to overcome those drawbacks.
Before my current brick-and-mortar bank closed my account and when I was in good standing with them, me and my girlfriend had opened a joint account at a local bank. So, I do still have a brick-and-mortar bank that I use. It’s connected to my Chime account.
I would HIGHLY recommend still being with a brick-and-mortar bank if you use Chime. This is just as a backup measure in case you need to access your money quickly or you have trouble depositing your money with Chime.
With your bank linked to Chime, you can just make a deposit with your bank and move the funds from your bank account to your Chime account (and vice versa).
If your money becomes missing, Chime has the support of not one, but two FDIC insured brick-and-mortar banks, so your money is safe.
Plus, if you need quick access to it for cash… visit an ATM or ask for cashback during checkout at a Walmart or something.
WHO CHIME IS GREAT FOR
I think that Chime is perfect for young people to learn how to manage their money. It’s also a great tool if you’re not the best when it comes to managing your finances (and you’re actively trying to manage your money more wisely).
WHO SHOULD NOT USE CHIME
Stay away from Chime if you’re not that responsible with your money or if you aren’t tech savvy (even though the app is so very easy to navigate, a child could do it).
Also, if you like talking to a person face-to-face or you need other banking options, such as loans or CDs, then Chime may not be for you.
Are you a Chime user? What experiences have you had with the app? Could you relate to any of the experiences I had? What made you join (or leave) Chime? How have they helped (or hurt) you? Do you have any questions about my experience with Chime or my old experience with the brick-and-mortar bank (I won’t tell you who it was)?
I’d love to hear from you! Please, leave your comments below.