If you're trying to achieve financial stability, it makes sense to work with a bank that's actively trying to help you stay on top of elements like your credit score. Chime bills itself as such an asset, but does it provide as many benefits as it claims?

Overall, Chime can work well for those who want a simple and easy way to take control of their finances. However, it does have some limited options, and there have been numerous complaints about the app closing accounts without notice. So, with that in mind, let's take a comprehensive look at Chime and see whether it's worth the hype.

A Brief Introduction to Chime Bank

Chime was founded in 2013 by Chris Britt and Ryan King. From the beginning, Chime was developed as an app, meaning it would be easier for customers to manage their money remotely, rather than having to visit an in-person branch. The company billed itself as an alternative to traditional banking, catering to a younger crowd that wanted to get financially educated but was turned off by more conventional methods.

Since then, the company has steadily grown and become a viable alternative to other banking options like Chase, US Bank, Bank of America, and others. However, Chime has come under scrutiny recently thanks to numerous account closures, starting in 2020. The company said these closures were due to anti-fraud measures, but it seems as if Chime may have been a bit too aggressive in its tactics, leading to many complaints from customers.

Other than these complaints, which have slowed down, Chime offers some attractive features that make it an appealing option for those who like using an app for everything. Let's break down how Chime works and whether it's suitable for your needs.

How Does Chime Work?

Chime Visit site

Chime is not actually a bank, but rather an online money management system. While you can get a checking and savings account, your funds are held in two partner banks, Stride and Bancorp. These institutions are FDIC insured, so you can feel confident that you won't lose your money.

There are three primary products that Chime offers - a checking account, a savings account, and a visa credit builder card. Here's an overview of how each one works:

Chime Checking Account

chime checking account benefits screen

Unlike other banks, there is no fee to keep this account, and you don't have to maintain a minimum balance. It works best with direct deposits, but you can deposit cash and checks at one of thousands of partners across the US (i.e., Walgreens). However, some retailers may charge a fee to do this, so make sure to plan accordingly.

Some perks that come with this checking account include:

  • Faster Withdrawals - If you have direct deposit, you can often withdraw the money up to two days earlier than you would with other banks. However, Chime needs to verify the sender first before you can access this feature.
  • SpotMe - Overdraft fees are common with other banks, but not Chime. If you activate this feature, the app will spot you for up to $200, and then repay itself once your account has a positive balance. Alternatively, you can set up your account to decline charges if there aren't sufficient funds.
  • Mobile Deposits - You can snap photos of your checks and deposit the money without having to visit a retailer in-person.

Chime Savings Account

chime saving account APY benefits screen

As with the checking account, there is no minimum balance and no fees to open or maintain the account. It's also a high-interest account, so you can earn up to two percent APY. Compared to other high-yield savings accounts, this percentage is pretty competitive. Other features include:

  • Automatic Savings - You can set up your accounts to transfer 10 percent of each deposit to your savings account so you don't have to think about it later.
  • Round Ups - Chime can round up all your purchases and put the difference in your account. This setting adds up quickly if you use your checking account often.

You can't deposit money directly into your savings account, but you can move funds back and forth between your accounts as much as you want. Also, there are no maximums for how much interest you can earn, which is a nice bonus.

Chime Credit Builder Secured Visa Credit Card

chime credit builder secured visa credit card benefits screen

Building credit is necessary if you want to buy a car or a house, but it's also super easy to get into massive debt. This "credit card" works differently by operating the same as a debit card but counting towards your credit. All you have to do is deposit any amount into your account, and that becomes your spending limit. Deposit more funds and you can spend more.

Each transaction counts toward your credit score, but you don't run the risk of running up a massive balance and incurring hefty interest fees. This card is ideal for people with no (or limited) credit history, or those who need to rebuild their score.

Is Chime Safe for My Money?

Safe Money chime screen

Although the issue with closed accounts is still ongoing, it doesn't seem to be very widespread, and Chime is working to resolve individual cases. Ultimately, your money is secure in an FDIC-insured bank, so you can feel safe when depositing funds into your account(s).

Also, the app comes with standard security features and protection, so you shouldn't have to worry about hackers getting into your money and funneling it away. As long as you have a strong password and protect your phone, you'll be good to go.

Can I Use Chime Without Direct Deposit?

Woman working with finances on the table. smartphone, money, notepad

Yes, you can deposit cash or checks at one of over 60,000 retail locations around the country. However, since Chime is a digital platform, it's best to use mobile check deposits or direct deposit for added convenience. Plus, you can withdraw direct deposits early, so you have more flexibility when managing your money.

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Pros and Cons of Chime Bank

As we've discussed, there are some real benefits of using Chime as your primary banking resource. However, the app isn't perfect, and it has some drawbacks. Here's a rundown of the pros and cons of Chime:

  • No Fees - Basically, you don't have to pay fees for anything. You don't get charged to open or maintain an account, you can avoid overdraft fees, there are no fees for foreign transactions, and no fees to use an in-network ATM. Overall, Chime isn't out to nickle-and-dime you, which is refreshing considering so many other banks are
  • Convenient Access - You can deposit checks, move money around, and get help 24/7. You can also locate in-network ATMs for fee-free withdrawals whenever necessary. Overall, as a mobile app, you're never too far away from your money
  • Limited Financial Options - While a checking and savings account are necessary to manage your finances, there are many other financial products that can help you achieve your goals. Unfortunately, Chime doesn't offer any of them, such as CDs, bonds, mutual funds, or anything else. So, if you're looking to expand beyond the basics, you need to search elsewhere
  • No Physical Locations - Sometimes, going to a bank is helpful if you want to ask questions about an account or deposit cash. Chime has no physical locations, so you have to handle everything through the app. Even when you're working with a retail partner, they won't be able to answer any questions since they're not a Chime representative

When is Chime Better Than a Regular Bank?

Chime Checking Account vs. traditional banks screen chime vs chase vs wells fargo

There are two types of people who can likely get the most out of Chime - those who have a negative banking history and a low credit score, or those who are just starting to manage their own finances (i.e., teens and young adults). Because Chime is easy to sign up for, even those with lousy credit can get an account. Plus, since there are no fees, you don't have to worry about dipping into a negative balance.

That said, if you're pretty experienced with financial basics or want access to other banking features (i.e., investing and loans), Chime won't be able to help you. Also, while you can get a credit builder debit card, you can't get an actual credit card, so you have to look elsewhere for that, too.

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How to Set Up a Chime Account

Fortunately, signing up for a Chime account is fast and easy, and you should be able to get approved in a couple of minutes. Chime bills itself as a "second-chance" bank, so even if you've been rejected by other banking institutions, Chime can likely approve your account.

Just go to Chime.com and submit your personal information, then download the app. Once you're approved, you can set up your app account and start making deposits and withdrawals immediately. However, keep in mind that you have to visit an ATM to deal with any cash.

You can also sign up for your Visa credit builder card, and it will be mailed to you.

Bottom Line: Is Chime a Good Bank?

Very happy woman with money in hand

Since Chime isn't technically a bank, it's hard to compare it to traditional banks like Bank of America or Chase. However, as a money management service, Chime is better than other online-only options because you can deposit and withdraw physical cash, and you don't have to pay any fees. Overall, Chime works well for some people, but it's ideal for everyone. Understanding its advantages and disadvantages can help you decide whether it's right for you.

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The responses below are not provided, commissioned, reviewed, approved, or otherwise endorsed by any financial entity or advertiser. It is not the advertiser’s responsibility to ensure all posts and/or questions are answered.

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I love Chime so convenient and you get payed 6days earlier and build credit