By Leah Bourne
August 12, 2022
We shop online. We socialize online. So why not opt for a digital bank? While the big banks have apps and encourage digital banking, there are new banking platforms that are entirely digital that help users automate their savings, get paid early, and as probably the biggest differentiator, don’t have fees. Some are even offering interest on checking accounts (essentially unheard of among the big banks).We compared the eight big offerings to see what the pros and the cons are. It’s a brave new world among the fin-tech banks, and going to bank branch might a thing of the past in the not too distant future.
1. Chime
One of the biggest names in digital banking, Chime, based in San Francisco, is adding more customers each month than either Wells Fargo or Citibank per The New York Times.Chime is promising a new kind of banking to its customers –good-bye to all banking fees including overdraft fees, minimum balance fees, and so many more (instead of making money on fees, Chime makes money from transaction fees it gets when people use its debit card).*Pros: Besides the promise of no fee banking, Chime offers a Round Up feature when you use your Chime Visa Debit Card, rounding up purchases and putting the round up in a savings account. The app allows you to set savings goals, transferring money directly from a person’s paycheck into their saving account. And it touts its get paid two days early feature and the fact that there are no foreign transaction fees when you withdraw money from overseas.Cons: While Chime allows its users free access to a network of almost 40,000 ATMs, it charges $2.50 per transaction for out-of-network ATM use. You have to deposit cash via Green Dot deposit locations, and you might get charged a fee. Chime doesn’t offer checks, but will write checks on a customers behalf, up to $5,000 per payment and $10,000 total in a calendar month. While its savings account boasts no fees, it has an annual percentage yield of .01%, lower than some of its competitors.To see our complete review of Chime head here.
*Chime is a financial technology company. Banking services provided by The Bancorp Bank or Stride Bank, N.A.; Members FDIC. Out-of-Network cash withdrawal fees apply. Third-party and cash deposit fees may apply.
2. Aspiration
Aspiration, based in Marina Del Rey, California, offers a checking account product called the “Summit Account” and that checking account allows its users to earn interest, doesn’t come with a monthly service fee or even ATM fees and people can open accounts with just $10. Aspiration also wants to help its users spend their money in a socially responsible way, and it does this by giving its users a social impact score based on where they are spending money and how those companies treat the environment, employees and the community at large. The company has also made a pledge to donate 10% of its earnings to “charities helping struggling Americans start businesses and build better lives.”Pros: One of the rare checking accounts that offers interest — a 1.00% annual percentage yield if you have over $2,500 in your account. It also doesn’t charge for the usage of ATMs, and will reimburse users for any charges that hit their account, even internationally. You can get reimbursed for losses due to identity theft as part of the limited insurance coverage that Aspiration offers.Cons:Users can expect an overdraft fee of $25. There is no savings account offering at Aspiration. Another downside is that Aspiration doesn’t accept cash deposits.Learn more about Aspiration here.
3. Varo
Varo offers both a free checking and a savings account (with a particularly high-yield). Similar to other mobile-only banking apps, it offers automated saving, and a network of fee-free ATMs.Pros: Like other digital banks, Varo has no fees or minimum balance requirements. Users have access to 55,000 completely free ATMs worldwide and even if you use an ATM with a fee, Varo won’t charge you one. Users also won’t encounter foreign transaction fees. If Varo receives a payroll notification before a user’s payday, it will deposit the money right away. Its savings account offers a 2.10% annual percentage yield for all balances, almost unheard of in the industry.Cons: The only way to deposit cash into your account is to go a retailer that is a part of the Green Dot network — retailers including CVS, 7-Eleven and Walgreens. Users will then likely have to pay a fee to deposit cash. Varo also doesn’t provide checks, but users are able to use a bill pay feature to have Varo send checks for them.
4. Simple
Simple, an all-digital checking account, is designed to be exactly as it sounds–simple. There is an app for users that they can download and an account comes with a Visa debit card.Pros: No monthly fees, no minimum balance requirement, and no overdraft fees. There are about 40,000 free ATMs around the US that customers can use. A budgeting tool on the app keeps track of how much users can safely spend, taking into account their spending patterns and monthly bills.Cons: There is no way to deposit cash. No savings account offering means Simple isn’t full service, and customers will have to go elsewhere for other banking products.
5. Moven
Moven, one of the first big players in the digital banking space provides a mobile app and a prepaid debit card to its users. Features include an automated money savings tool called “Moven Stash” and a budgeting tool that tracks users’ spending.Pros: Moven gives users access to 42,000 completely free ATMs, and there is no fee from Moven’s end if you use another ATM (though the operator might charge). There are basically no fees associated with a Moven account–so say good-bye to overdraft fees and minimum balance requirement fees. App features including a visual that lets you compare your spending month to month and a savings product called “Stash” which allows you to easily auto-save help set it apart.Cons: To deposit cash you must visit a retailer that is a part of the Mastercard rePower network like CVS and you’ll likely get charged. Depositing checks is also less than ideal: only free if you select 10-day processing, and if you need the money faster you must pay a fee. Want to close your account? There is a $10 fee.You’re charged 4% for any transaction made in a foreign currency, and international ATM withdrawals have an additional 1% fee.
6. Radius
This Boston-based bank has one branch, but its online and mobile banking is where it shines. Its high-interest rates set it apart from the competition, but you will need to have a minimum balance to see this kick in. You’ll need to make a $100 deposit to open an account.Pros: There is no monthly fee and no minimum balance requirement after the $100 to open an account.If your balance hits $2,500, a 1.00% annual percentage yield kicks in (extremely high for a checking account). Use ATMs completely for free that are a part of the SUM network, and Radius won’t charge you a fee for using ATMs outside of the network. It also offers monthly refunds of fees made by non-network ATMs. Its savings account also has a high APY of 1.50% for balances of $2,500 or more. One of the rare mobile banks that allows you to deposit cash through the NYCE network of ATMs.Cons:Your interest will drop to zero if you don’t keep at least $2,500 in your Radius checking account., and will drop to .05% if you have less than $2,500 in your savings account. Unlike other digital banking products, Radius Bank charges $25 for each overdraft or returned item. After the fifth calendar day that you leave your account in the negative, you’ll be charged $5 a day.
7. Axos Bank
Formerly called Bank of Internet USA, this online bank does away with many of the fees associated with having a checking account or savings account, but where it shines is with its rewards program that mimics credit card offerings.Pros: With Axos’ Rewards Checking there are no monthly balance requirements or fees. You won’t get charged to use ATMs in the US, and will even get reimbursed on the fees operators charge. Its rewards options are pretty neat but require some effort: With Rewards Checking you can earn an APY of 1.25% but need to receive a direct deposit of $1,000 or more per month and make at least 15 debit card transactions a month. With the CashBack Checking product you’ll get 1% cash back on debit card transactions if you keep an average daily balance of $1,500. Axos’ savings product called The High Yield Savings account has an interest rate of 1.30% and no minimum balance requirement.Cons: This bank doesn’t make depositing cash easy, you’ll have to use a service called Reload @ the Register available at stores including 7-Eleven and CVS who will charge you a fee.
8. Ally Bank
Formerly known as GMAC Bank, but rebranded to Ally Bank in 2010, Ally Bank is known for its high-interest rates on its checking and savings products.Pros: Unlike other online banks Ally provides free checks to customers. There is no minimum balance requirement and no monthly fees. It also offers a product called Ally Invest for those looking to keep all of their money needs in one place. There’s no fee to use a network of over 43,000 ATMs and Ally will reimburse users up to $10 per billing cycle for charges from out-of-network ATMs. Earn 0.10 interest for checking accounts and 2.00% interest for savings accounts.Cons: Ally doesn’t accept cash deposits. After your sixth transfer from your savings account you’ll have to pay $10 each time.Feature Image: Courtesy of Chime
