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Chime Bank Is Throwing Banking Traditions to the Wind

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New player Chime Bank is billing itself as the “bank account that has your back”. Chime, which partners with The Bancorp Bank, a FDIC member, is positioning itself to capitalize on consumers’ frustration with the industry. Shane Steele, vice president of marketing for Chime sheds light this new kid on the block.

What was the inspiration for creating Chime Bank?

Managing money is hard, and too often banks aren't making it easier. At Chime, we're dedicated to building a new kind of bank account that makes it easy to achieve financial wellness. We do this by eliminating unnecessary fees, creating a service that puts members in control, and helps them form healthy financial habits through features such as our automatic savings program.

Why was a bank like Chime needed?

Consumers are fed up with big banks because of fees, poor service, and outdated technology. Millennials are particularly dissatisfied, and most would not recommend their bank to a friend. That’s according to findings from the Banking Barometer report which also indicated that the mobile-first Millennial generation prefers using a smartphone to manage their banking needs over walking into a bank branch. They want more mobile-friendly features that aren’t offered at their current bank, and they want to get rewarded for their business.

Big banks are fattening their pockets through sneaky fees that chip away at their own customers’ savings

It’s no secret that America’s big banks are raking in huge profits from fees. Last year they pocketed $33 billion in overdraft fees alone. Big banks are fattening their pockets through sneaky fees that chip away at their own customers’ savings, in many cases without them even knowing about it, and it’s contributing to a massive redistribution of wealth in this country. Our April 2017 Bank Fee Finder report shows that on average Americans are now paying about $330 in bank fees annually. That’s more than a subscription to Netflix, Spotify, and Amazon Prime, combined!

Chime is redefining what a bank account is, and what it should do by empowering people to achieve financial wellness rather than preying on customers through fees or financial products that take advantage of customers’ short term misfortunes.

What are you trying to do different and why?

First and foremost, we believe that a bank account shouldn’t cost you money. With Chime, there are no monthly minimums or fees, no overdraft, no transfer fees, no international fees, and we offer 24,000+ fee-free ATMs.

Our product is designed to put our members in control and to make managing money easier through automation. For years, personal finance experts have recommended automation as one of the best ways to achieve financial wellness. Chime makes it incredibly easy to sign up and get started with a healthy savings habit through our automated savings programs. And our app keeps members in control with real-time transaction alerts and daily balance notifications.

Finally, Chime makes it easy to manage your finances all in one place. You can set up direct deposit to the account as well as connect other accounts to view your other account balances on the Chime home screen and transfer money in and out between accounts.

How do you compare to Simple, for example?

Chime offers a number of unique features that help our members achieve financial wellness. Members who fund their account through payroll direct deposit can get paid up to two days early compared to other financial institutions.

Chime also offers a savings account and an automatic savings program that make saving effortless. Our “Save When I Spend” program lets you save spare change every time you use your Chime card. When you enroll, we round up each transaction to the nearest dollar and transfer the Round Up to savings. In addition, our “Save When I Get Paid” feature lets members automatically transfer 10% of every paycheck to savings. It’s a great way to “pay yourself first’ in order to boost your savings account without thinking about.

What are the chief advantages of banking with Chime?

The features that our members love most - lack of fees, early direct deposit, automatic savings, and a great mobile app.

  • Avoid Fees - Unlike other banks, Chime has no monthly minimums or fees, no overdraft, no transfer fees, no international fees, and 24,000+ fee-free ATM locations.
  • Early Direct Deposit - Members who set up payroll direct deposit with their employer can get paid up to two days early.
  • Automatic Savings - Chime offers two ways members can automate their savings. Members can save Round Ups every time they pay with their Chime card, and they can save 10% of every paycheck automatically.
  • Mobile App - Chime’s award-winning mobile app has been featured by Apple as one of the top banking apps. Members get real-time transaction alerts, daily balance updates, and can manage all aspects of their account on the go including bill pay, instant transfers to other Chime members or sending paper checks.

What have been some of the early challenges for Chime?

In the early days, the main challenge was growing awareness for the brand so that more people know about our product.

How have you overcome them?

We’re fortunate that our members love Chime. Our average NPS (Net Promoter Score) is close to 70 so we benefit from strong word of mouth which has helped grow the business 10x in the past year.

What might Chime look like five years from now (in terms of offerings, services, etc.) and why?

If our goal is to help our members stay on top of their finances and get head, we need to give them control across their entire financial lives. That’s why we believe the bank of the future will be open, connected and API driven. Our vision is to be a connected hub that enables members to seamlessly manage every aspect of their financial lives across all of their financial accounts. That could include credit, loans and investing products and services. In addition, we’ll see exciting improvements in Artificial Intelligence (AI) that will help members manage cash-flow decisions across all of their financial accounts.

How are you measuring success?

We measure success in terms of member satisfaction and improving their financial health. We’re thrilled to see that our members love Chime based on the feedback we receive from members on a daily basis. In addition, our NPS tracking shows our members would recommend Chime to a friend which we see in our strong word of mouth and referrals. And of course, we measure success in terms of the explosive growth we’ve experienced in the last year.

Comments
111
111   |     |   Comment #1
Compared to the excellent article by Sabrina Karl on 5/12 - this one is frankly almost a press release.
222
222   |     |   Comment #5
More like a paid promo. TL;DR seems to be a for-profit entity (with unspecified relations to an actual bank) that's trying to pretend it has the same virtues of a credit union (and copying BofA's dubious "keep the change" feature).
RJM
RJM   |     |   Comment #2
I think I saw they had a promo for $10 bonus a few days ago. Not sure its still going. Haven't had a chance to look closer at it. Plus, I don't know if it matters but I don't have a smart phone.
Keep the Change
Keep the Change   |     |   Comment #4
I don't have a smart phone either. Guess I have to earn money the old-fashioned way, with high-interest CDs.
Kaight
Kaight   |     |   Comment #8
I do not now use any sort of mobile telephone, and I never have used such a device. Smart telephones are instruments of enslavement . . . . IMO, of course . . . . and expensive ones at that.

Nevertheless, I don't mind when a bank caters to smart telephone users. After all, the devices are very, very popular. It is annoying, though, when a bank or any other type of business assumes everyone owns and uses such a device. That is annoying . . . and amusing at the same time.
Keep the Change
Keep the Change   |     |   Comment #3
Chime's Savings account pays 0.01% interest. The most interesting feature of this bank to DA readers is probably the 10% match on the "rounded up" amount of debit card purchases that is transferred into the savings account, up to $500/year. Makes me think of Bank of America's "Keep the Change" (KTC) program that offered 100% match up to $250 for a limited time ... and many purchases of Ramen noodles, bananas, 1 cent stamps, and gas in 1 cent increments to get the maximum match. In hindsight, probably the hardest $250 I ever earned!
Keep the Change
Keep the Change   |     |   Comment #6
Even though this article on Chime Bank probably doesn't apply to the typical rate-chasing DA reader, I think it is also important for us to understand how the banking system and marketing is evolving to cater to the younger/"millennial" crowd. So, I do appreciate this article from that perspective!
moneysaver
moneysaver   |     |   Comment #7
The article, both in fact and in impression, is very misleading and inaccurate as regards the "fees" charged by this bank. The article makes it sound like they don't charge a lot of fees, and specifically says in at least two places that they don't charge "international fees."

But if you read the terms and disclosures documents on Chime's website, you'll find them disclosing that using their VISA debit card, you'll be charged a $2.50 fee for each and every ATM or over the counter funds withdrawal.

"Fee Description
Fee Amount and Frequency --  Cash Withdrawal Fee
(applies to both ATM and Over The Counter "OTC" withdrawals) * $2.50 (per transaction). Transactions at MoneyPass® ATMs are fee free."

And, while Chime may not charge a fee itself, their disclosures clearly state that the "card issuer" for their account will charge a 3% fee for transactions made in other currencies or made in U.S. $ outside the 50 states. Trying to split hairs between Chime and the entity that issues its VISA card is a sneaky, disreputable deception.

From Chime's Deposit Account disclosures relating to foreign transactions:
"If you obtain funds or make a purchase in a currency other than the currency in which the Card was issued, the Issuer may assess a foreign currency conversion fee of 3% of the transaction amount and will retain this amount as compensation for its services. Transactions made outside the fifty (50) U.S. states and the District of Columbia are also subject to this conversion fee even if they are completed in U.S. currency."

It's one thing for the bank to falsely and misleadingly state its case in its own marketing pitch. But it's a worse thing for DepositAccounts to allow those deceptions to be presented in an article format, which treads on the trust and good reputation that the site has for presenting accurate and real financial information.
Kaight
Kaight   |     |   Comment #9
I disagree. Ken has done me more good turns than time permits me to relate here. His kindness to me personally has been ongoing for a good many years. My best knowledge of Ken is that he has a family to support. Within certain bounds not exceeded here, I do not begrudge Ken opportunity to support himself and his family.
moneysaver
moneysaver   |     |   Comment #10
My comments above were not, and not intended as, a criticism of Ken, who I agree has done wonders thru his website over many years. Rather, my criticisms were to highlight the inaccurate and misleading article that is the subject of this thread, which if you'll notice, was authored by another person, not Ken.

My closing comment, in line with that, was to point out that when this kind of a factually inaccurate and misleading article is posted to the site, doing so diminishes and undermines the very positive reputation the site has earned thru many years and countless great/useful/informative articles that have been posted here.
???
???   |     |   Comment #12
Article does sound like a Paid commercial which Ken accepts on this site. But wouldn't know if the author was compensated by Chime, or if its a freebie via DA sponsorship of the author.
Ken routinely removes comments reported and confirmed of spamming.

As you have shown by this post, consumers have to READ the terms and conditions of their financial dealings. In other words people need to CYOA
cover your own *ss
barry_NY
barry_NY   |     |   Comment #11
Every 2 bit bank today is making the same claiims, and has an app with even more features. Capital One 360, for example, equals or exceeds this description. Nothing new or special here.
moneysaver
moneysaver   |     |   Comment #13
The original article here isn't labeled as any kind of "ad-vertorial" -- a term meaning advertising in editorial form -- or as any kind of paid/compensated content. It's presented as a regular DA blog item, just like the many others than Ken and sometimes Sheryl present. So I judged and evaluated it on that basis.

And while I do agree that it's the responsibility of individuals to do their own due diligence especially in regards to their own money, it's also a reasonable expectation that bylined blog posts written here should not contain misleading and inaccurate statements. IMHO, as a longtime reader here, Ken himself has a very good record for accuracy and of correcting errors/mistakes when those are called to his attention by readers of the site.
Mr. Critic
Mr. Critic   |     |   Comment #14
I don't see anything special about Chime.
No fees? Well, if you have a balance large enough (and its never huge), or relationship accounts like CDs, or even auto deposits--then most banks and credit unions have no fees.
AS for "financial wellness"--that's a nice catch phrase for marketing--but what the heck is it???
Nope, Chime, you are just another name and just another bank --and not a very special one.
Start offering some competitive rates, some new mobile apps, some linkage thru other branches (like credit unions that have "shared branching") or improved/enlarged FDIC coverage by adding your own insurance (if that's possible) and maybe you will catch on.
Otherwise you are Synchrony, Ally, CIT, Tomato, GS Bank, .........
And by the way, Chime is not a good name--if it means anything , then its not a good thing (look in dictionary). If it doesn't mean anything, then why use it.
Good luck and good buy
Ken Tumin
Ken Tumin   |     |   Comment #15
I just wanted to make it clear that DepositAccounts did not accept any money in exchange for publishing this article or any other articles. The article was intended to provide some insights into this new “bank”. In future articles we’ll make sure to include both the pros and cons of any new bank.