Fintech developer Varo offers a cash management account that boasts a high interest rate and no fees. For people who want a simple, high-yield mobile bank account, Varo is worth considering — especially if you’re looking to save with some extra tools from an app. However, watch out for third-party fees for depositing cash into your account, plus limited access to checks. Note also that Varo itself isn’t a bank — it partners with The Bancorp Bank to hold deposits and provides FDIC insurance up to the legal limit.
Varo account features
The Varo cash management app has two sides: a Bank Account, which is basically a checking account; and a Savings Account, which holds your long-term savings. Varo also has features that you won’t typically get with traditional bank accounts, such as having direct deposit paychecks credited to your account up to two days early and zero fees on overdrafts under $50 (if you qualify). Varo is designed to be used through its mobile app, so you will need to have a smartphone and be comfortable using it frequently to bank with Varo.
Varo Bank Account features
Varo’s Bank Account works like a conventional checking account, complete with a debit card to make purchases. Keep in mind, however, that Varo does not pay any interest on balances kept in your Bank Account.
Varo lets users send checks for free, although it does not provide them with checkbooks. Here’s how it works: You submit a request via the app for a check to be mailed to a person you specify. Varo handles the rest.
Direct deposit payments are credited to your account up to two days in advance. While most other banks wait until direct deposit funds are transferred to them to deposit the money into your account, Varo credits your account as soon as it’s been notified that money is headed your way.
Varo lets you deposit funds into your account via direct deposit, mobile check deposit (not available yet for Android), ACH bank transfers and P2P transfers from companies like Venmo or Paypal. Wire transfers currently are not available.
You can also deposit cash in your Varo accounts, but it will be costly and inconvenient. You can either buy a Green Dot MoneyPak and create a Green Dot account to deposit cash, or you can deposit cash directly into your account when you check out at Green Dot locations, which include stores such as 7-Eleven, Walmart, CVS and Walgreens. If you opt to deposit cash at checkout, it can take up to an hour for the funds to appear in your account, and the store charges additional fees.
Varo Savings Account features
Varo’s Savings Account offers a great interest rate and has a couple of built-in tools that you might find helpful.
The Save Your Pay feature allows you to set aside a certain percentage of every direct deposit. For example, each time your paycheck is direct deposited, Varo will automatically calculate the amount based on the percentage you set and then transfer that amount into your savings account. If your paycheck tends to fluctuate in amount and you don’t want to do the math yourself, this is a great feature.
The Save Your Change feature rounds up your purchases to the nearest dollar and then stashes the difference in your Savings Account. For example, if you buy a taco for $3.75, Varo will move $0.25 from your Varo Bank Account into your Varo Savings Account when the transaction clears, typically by the next day.
One of the best things about Varo is that you can earn up to 2.80% APY on your savings account balance. Note that if your Savings Account balance exceeds $50,000, you will earn 2.02% APY on the entire balance. You regain the premium APY the day after you bring your balance to $50,000 or less. To earn it, though, you’ll need to meet three conditions each month:
- Make at least five purchases with your debit card
- Receive at least $1,000 in total direct deposits to your bank account
- Have a maximum balance of $50,000 in your savings account
If you don’t meet these conditions you won’t earn the premium interest rate. Instead, you will earn 2.02% APY.
With the Varo Savings Account, you’re limited to making six withdrawals each month, which is the standard per federal regulations. If you try to make more than six withdrawals, the transaction will be declined until your limit is reset the next month. If you reach this limit and do need emergency access to your money, you can reach out to Varo customer service for assistance.
|Requirements to Earn APY||APY|
|Balance must be at least $0.01||2.02%*|
|Balance must be no more than $50,000
Must receive payroll or government direct deposits totaling at least $1,000 each month into your Varo Bank Account
Must use your Varo Visa Debit Card for at least five purchases each month
Varo fees and fine print
Varo has no minimum deposit or minimum balance requirements. Additionally, Varo itself charges no fees at all. You may incur fees in other ways, however, such as if you want to deposit cash into your account at a Green Dot retailer or if you use an out-of-network ATM. While Varo doesn’t charge a fee for out-of-network ATM usage, you may still incur third-party fees.
Varo offers no-fee overdraft protection, but only to accounts that meet certain requirements. You must have at least $1,000 direct deposited into your account each month and make at least five debit card purchases per month. Once activated, you may overdraw your account by up to $50, although you will have to repay your overdraft balance within 30 days to remain eligible for the feature. If you don’t meet these qualifications, or if you try to overdraw your account by more than $50, the transaction will simply be declined and you won’t be charged any fees.
|Balance must be at least $0.01||$0|
Using the Varo mobile app
The Varo mobile app is where you’ll access the entire Varo experience. You’ll do everything through the app, starting with applying for both a Varo Bank Account and a Varo Savings Account.
Once your account is open, you can link up your other external bank accounts so you can easily see your full financial picture when you log into the Varo app. This also allows you to transfer money between accounts if you wish. Through the app you can also apply for and activate a Varo debit card to use with your Varo Bank Account, and set up Varo’s handy savings tools to use with your Varo Savings Account.
Varo uses the latest encryption technology to protect your data. If you ever need help with the app or with your account, Varo allows you to either call or email the customer support team. However, we couldn’t find any evidence of a secure messaging or chat system within the app itself, which some other comparable apps do offer. If you opt to email the customer support team, it’s always a good idea to leave out any details that a cybercriminal could use to access your account.
Opening a Varo account
To qualify for a Varo account, you must be a U.S. citizen or have permanent resident status and be at least 18 years old. You will need to provide your Social Security number, a government-issued photo ID, such as a driver’s license or passport, and other identifying information, such as a phone number and email address, to open an account.
Since Varo is meant to be used with the mobile app, it’s probably easiest to apply via the app, which you can download on iOS or Android. But if you’d rather apply online with your computer, that will work too, though you’ll need to use an iOS or Android device to access and use your account after applying.
What else you should know about Varo
Varo does have certain withdrawal limits that you may find inconvenient, especially if you need to make a large purchase. You can only make up to $2,500 worth of purchases per calendar day with your with your Varo debit card, and you can only withdraw up to $500 in cash from an ATM per day with your debit card.
Varo also limits the amount of cash you can deposit. You can deposit up to $1,000 per day and only up to $5,000 per month. Additionally, you may have limits on how much you can deposit in your account via mobile check deposit, although these limits vary by person and are determined depending on your account activity and how long your account has been open. You can find your own mobile check deposit limit in the Varo app. There are no limits on how much you can deposit using bank-to-bank ACH transfers or direct deposits, however.
Another drawback of Varo is that it does not offer 24/7 customer service. You can get ahold of its U.S.-based customer support team between the hours of 6 a.m. to 6 p.m. PST, or 8 a.m. to 4 p.m. PST on the weekends. You can also email Varo’s customer support line at [email protected], although it’s a good idea to keep any unsafe details such as your bank account number out of the conversation if you go this route.
Overall review of Varo
Varo is a solid option for tech-savvy people who are looking to maximize their savings. Its free savings tools help you funnel more of your money automatically and painlessly into your savings account, and once there, your money will earn a competitive rate, even compared to other online banks.
However, we would not recommend Varo to people who are looking to earn interest on their checking account, or who aren’t so keen on using their mobile phones to manage their accounts. Furthermore, Varo may be inconvenient in some cases, such as if you frequently deposit cash into your account or want the ability to write a paper check. But overall, Varo is worth considering.
All rates above are accurate as 10/21/2019