Americans have recently become very serious about saving their money. It’s no secret that the coronavirus pandemic created widespread economic instability. Tens of millions of people lost their jobs, supply chains were heavily disrupted, and inflation started to skyrocket.
About Savings Accounts in America
The majority of Americans took note of these developments and started saving more money. It’s estimated that Americans saved an extra $2.7 trillion over the course of the pandemic. These numbers are partially the result of government stimulus programs, eviction moratoriums, and remote work opportunities.
Despite these record-shattering numbers, Americans are still being very careful with their money. A survey conducted in October of 2021 found that 43 percent of survey participants wanted to save more money in 2022. As society slowly returns to normal, it might be harder for some people to save money than it used to be.
The key to saving money is choosing the right rewards program. Just about every bank will offer you interest rates on your savings accounts, but the majority of them are very low. A few extra dollars a year won’t be enough to make any kind of difference long term. There are plenty of options available, and one of the most popular is Chime.
What Is Chime?
Chime is an American financial technology company that provides mobile banking services for its users. The company was founded in San Francisco in 2013 by CEOs Chris Britt and Ryan King. The idea was to create an alternative to traditional banking that utilized the latest technology.
The financial services offered by Chime are provided by The Bancorp Bank and Stride Bank. Account-holders are issued Visa endorsed debit or credit cards. There are no physical branches of Chime, but users will have access to their accounts via the company’s website or app.
By February of 2020, Chime had more than eight million account holders. That’s an impressive number for an online-based financial service that was less than six years old at the time. Once you see the benefits that come with Chime, you’ll be able to understand how such rapid growth was possible.
What Are the Benefits of Having a Chime Checking Account?
- No banking fees or a minimum balance are required.
- A service for debit card transactions called SpotMe.
- Funds are available as soon as your employer deposits them.
The main features of a Chime checking account are that there are no banking fees or a minimum balance required.
While that might not initially sound like a big deal, keep in mind that the average American pays $7 a month in banking fees. Spending $84 a year to the bank is especially ridiculous since the interest rate that you receive only amounts to a few dollars each year.
Chime also offers a service for debit card transactions called SpotMe. This feature is entirely optional and allows you to overdraw your account by as much as $20 without triggering a fee. Chime has the option to increase this limit depending on a few factors such as your account history, frequency/amount of direct deposits, and spending activity. It’s possible that you could overdraft your account by $200 and not incur a fee.
Another program offered by Chime revolves around your direct deposits. It can usually take a direct deposit between two and five days to clear. With Chime, you can have access to your funds up to two days faster.
The funds are available as soon as your employer deposits them. Within minutes, you could use one of the 60,000 ATMs options across the United States and withdraw your money with no penalty.
How Does the Chime Savings Account Work?
The checking account features offered by Chime are fairly unique and beneficial. However, it’s their savings account options that really make Chime special.
The first thing to mention about Chime is that they offer a fairly high yield interest rate for savings accounts. Their 0.5% rate is typically higher than what the big banks will offer. There are also no minimum balance requirements or any cap on the amount of interest that you can earn.
The key feature of Chime is how dedicated it is to make saving money easier. There are two optional programs offered by Chime designed to help you save:
Save When You Spend
This feature will help you to save a small amount of money every time that you make a purchase. Anytime that you use your Chime debit card, the transaction will be rounded up to the nearest dollar. The difference will automatically be transferred to your savings account.
For example, a purchase of $8.17 at a convenience store will mean 83 cents will be transferred to your savings. It might not sound like much, but it will add up quickly. Especially if you frequently use your Chime debit card.
Save When You Get Paid
This feature helps to save up money anytime that you receive a direct deposit from your work. Each payday, your account will automatically transfer 10% of your paycheck as long as it’s more than $500. The rest of the money will go into your checking account as usual.
You can probably imagine how quickly you’ll be able to save with so much money being transferred. If you make $4,000 a month after taxes and get paid every two weeks, then you’ll automatically save $5,200 by the end of the year.
Does Chime Offer Any Other Services?
The last feature that comes with using Chime is their Credit Builder Card. Trying to get a credit card can be very difficult if you have no credit history or a low score.
One of the best things about the Chime card is that it’s available without a credit check. You’ll be able to get approved without a hard inquiry to your credit that can further damage your score.
Any payments that you make on it will be reported to all three credit bureaus, which will help to build or improve your score. Perhaps best of all is that it comes with 0% APR.
That’s an impressive deal considering that the average interest rate on credit cards is somewhere around 15%. It’s virtually impossible to find a credit card that doesn’t require a credit check, reports to all three bureaus, and doesn’t charge interest.
Are There Any Downsides to Using Chime?
Obviously, there are a lot of benefits to using Chime, and some of them are unbeatable. Before you rush off to their website to sign up, there are a few things that you should know first. Here are some of the most glaring downsides to using Chime:
No Physical Branches
The majority of Americans handle their banking online or via mobile apps. However, there are occasions when it’s best to enter a bank and talk with professionals physically. Chime doesn’t have any physical branches, so that’s not an option. Instead, their customer support is through the app, via phone call, or on Twitter.
One immediate drawback of this is that it makes cash deposits very difficult. You’ll need to use a retail location that features Chime’s cash deposit partners. While there are roughly 90,000 of these partners, it’s possible that you’ll end up being charged a fee for the transaction.
Another issue is that you can only withdraw a maximum of $500 a day from an ATM. Every bank has limits for ATM withdrawals, but they can be avoided by withdrawing funds in person. Without a physical branch to withdraw from, you could find yourself sorely lacking during an emergency.
Interest Rates
There’s no denying that Chime offers a high yield savings account when compared to most major banks and credit unions. It can be very difficult to find a traditional brick-and-mortar bank that offers anywhere near a 0.5% annual percentage yield.
The problem is that this interest rate is fairly low when compared to other online options. If the interest rate of Chime is the main draw, then you might want to look elsewhere.
Limited Services
Chime offers up a wide variety of benefits that rival or even surpass those of traditional banks. However, there are a lot of services that Chime doesn’t currently offer. There are no options for loans, certificates of deposit, money market accounts, or retirement savings accounts. These features are borderline essential when you want to purchase a home or start planning for retirement.
ATM Charges
There are more than 60,000 ATMs across the United States that you can use for free. However, using an ATM that’s considered “out of network” can result in a fee of $2.50. There would also be a fee if you presented your debit card at a bank or credit union and asked for a withdrawal. You could find yourself traveling a large distance to find an authorized ATM that’s in the Chime network.
Various Requirements
Chime has certain requirements in place that you’ll need to meet before you can gain access to its most desirable features. For instance, you can’t open a savings account until you’ve opened a checking account. Another major drawback is that you can’t use any autosave features or deposit checks via mobile until you’ve signed up for direct deposits. In other words, Chime isn’t interested in being a secondary banking option; it wants to be the primary one.
Is There an Alternative for Chime?
Chime is an excellent option for someone that’s first starting out and trying to build their credit. It’s pretty much impossible to beat their Credit Builder Card, and the checking/savings features are more than adequate.
However, there is a better option if you’re already established financially and want a better saving investment opportunity.
Yotta is a banking account option that functions similarly to Chime. You’ll have the option of a debit card and credit card, access to thousands of ATMs, and know that your money is FDIC insured.
Just like Chime, all of these features are given to you for free. The main difference with Yotta revolves around rewards programs and interest payments. There are three main prize based programs that come with Yotta:
Weekly Drawings
The primary prizes will come from the weekly drawings. The way that it works is that you’ll be given one ticket for every $25 in your account at the beginning of the week. So if you have $100 in your Yotta account, then you’ll be getting four tickets for the week. You can also earn additional tickets by spending.
Every night there will be an additional number drawn at 9 PM EST. The final number is known as the Yotta Ball. At the end of the week, you’ll compare your tickets to the seven numbers that were drawn. Depending on how many of your numbers match, you could win life-changing prizes:
- If you match all six numbers and miss the Yotta Ball, then you’ll be the winner of a brand new Tesla Model 3.
- If you match all six numbers and the Yotta Ball, then you’ll be the winner of a $10 million cash prize.
Lucky Swipes
The Lucky Swipes program is another way for you to win free cash from Yotta. Anytime that you use your Yotta Debit Card, you’ll have a one in 150 chance that Yotta covers the transaction for free. These odds are reduced to one in 100 for dining options.
The odds are even higher for the Yotta Credit Card as it’s a one in 50 chance that your purchase is paid for by Yotta.
This program is especially beneficial when you learn that using your cards will get you additional tickets to the weekly drawing contest. The Yotta Credit Card offers a bonus ticket for every $5 that you spend, while the Yotta Debit Card offers one for every $10.
You can increase your odds of winning the jackpot while you potentially have Yotta pay for your current purchase.
What’s Better: Chime or Yotta?
At the end of the day, there are very clear benefits to using either online financial option. Chime offers a great way to get started and build up your credit easily. Yotta offers you the chance to win a life-changing amount of money and prizes. Ultimately, you’ll see why Yotta is the better choice.
