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Banks without physical branches are on the rise. This might make some of you a little uncomfortable, but it actually makes complete sense for many Americans. Because there are no brick-and-mortar locations to acquire, staff, and manage; online banks like Chime Bank can pass along those savings to you by offering some pretty impressive rewards.
“What if I ever need to physically go to the bank to do something?” You ask.
Well, I would ask in return, “When was the last time you really needed to go inside a physical bank branch?”
I'm not talking about using the ATM outside the bank. I'm talking about actually parking your car and walking through the doors of your local bank branch.
Most people I know hardly ever (or never) walk inside their bank. Their check is direct deposited, they use their Debit card, ATM, or the bank's website for money transfers and withdrawals. No physical bank branch was needed.
Think about the switch to buying Mp3's instead of physical CDs. Once you realized that you haven't actually pulled out a physical CD in years, you finally decided to make the jump to just getting it on iTunes. In the same way that CDs are pretty obsolete, physical bank branches might not be far behind.
So, can Chime Bank work for you? You tell me.
Or, as Chime calls them, “spending accounts” are completely free. No Minimum balance required. No monthly fees, and no overdraft fees. What's the catch? So, how do they make their money?
Well, you will get a VISA debit card for your spending, and VISA gives Chime Bank a kickback each time you swipe your card. So, they make their money from VISA, not you. Actually, they give some of that back to you in the form of Cash Back Rewards. We'll get to that in a second.
The only fee you can get charged is $2.50 for using an out-of-network ATM, but that's normal. When it comes to over drafting, your card will just be declined, or on the rare occasion that your account does go negative, they will pull money from your savings account to cover the deficit after 15 days to give you time to put more money in the account. If you want to avoid overdraft fees for good. This is one great way to do it!
The savings account has no minimum balance requirements either. And you can easily transfer funds between your Spending Account and Savings Account via the app or online. The interest rate on the savings account is a teeny, tiny .01%, but when was the last time there were decent interest rates on savings accounts? Trust me, though; the low-interest rate is offset by the fact that you can earn an extra $500 each year in rewards.
They have their own form of a “keep the change” program aptly called “automatic savings“. They will round up every purchase you make with your Chime VISA debit card to the nearest dollar and deposit it into your savings account. On average, if you swipe your debit card twice a day every day for a year, you'll have deposited $400 into your savings account. Pretty impressive.
Here's where the goodness is. You can earn cash back (aka FREE MONEY) in two ways:
With Cash back rewards like these, this could be an excellent option to help you with that Emergency Fund.
Since Chime Bank does not have their own ATMs, they use ATMs that are part of the MoneyPass network. There are over 24,000 MoneyPass locations nationwide. And you can get fee-free cashback at over 30,000 locations. They have an ATM locator right in their app or you can check on their website HERE. As long as you use one of those ATMs, there are no fees. So, if you think about it, you probably have access to more free ATMs than with most other banks.
These could be deal-breakers for you, but maybe not. For many people, paper check and cash deposits are a rare thing. A lot of people I know transfer money to each other using SquareCash or Paypal, and then from there, they can put it into their spending account. It's really quick and easy.
If you happen to need to mail a paper check for a bill or something. Chime Bank will create and mail a paper check for you at no charge. This “Chime Checkbook” feature is available right in their app and is like the bill pay offered by other banks.
One thing to note is that the money is pulled from your account when the check is drafted NOT when the check is cashed. I personally prefer it this way.
The Chime Bank App is the cornerstone to the account's convenience and simplicity. Anything you could think to do with your accounts you can do from their slick App. Besides the obvious of checking balances and moving money between your spending and savings account, the Chime app has some other cool features:
Only individual accounts are allowed. That's right, no joint accounts, and no second card as a workaround. So, if you're married and like having a joint checking account, this could be disappointing. They have said they are “actively working on this feature”.
If this seems like a great option for you, signing up only takes about 5 minutes. Click HERE to sign up for a Chime Bank account. If some of your non-negotiables are not fulfilled by Chime Bank like joint accounts or paper check deposit, maybe check back with them later and see if they've launched them.
Honestly, if just using a Chime Bank account can help you keep an eye on your account balances and give you the opportunity to get free cash back rewards on your savings and checking accounts, it could be totally worth it. You don't even need to deposit your whole paycheck there… just do part of it and use their spending accounts to get some rewards.