Chime Vs Cash App: How Do They Differ?

chime vs cash app

Are you unsure about Chime and Cash App? Well, you’ve come to the right place. Chime and Cash App offer easier and quicker online banking options.

These payment apps allow you to instantly transfer funds to people, banks, merchants, and companies from your smartphone or computer.

To get a better insight into Chime vs Cash App, here are comparative details between Chime and Cash App:

  • Chime processes your paycheck two days earlier with direct deposit. However, Cash App will hold your funds for two days before releasing them.
  • Chime is great for beginners looking to save their money, while Cash App is ideal for investors.
  • Chime is FDIC insured, but Cash App is not.
  • With Cash App, you can invest in stock and cryptocurrencies.
  • Chime gets its banking services from The Bancorp Bank and Stride Bank. On the other hand, Lincoln Savings Bank powers Cash App’s direct deposit as Sutton Bank issues debit cards.

But which of the two is the right banking option for you? Here are reasons why you should choose Chime vs Cash App or vice versa.

My Recommendation

Chime and Cash App are easy-to-use banking options. But I’d recommend Chime for users looking to save their money without incurring expensive fees.

On the other hand, Cash App is ideal for investors. One can use it to buy stocks or engage in bitcoin trading.

Want to learn how these online banking platforms came to be? Read on.

Why You Should Choose Chime

chime bank

Here are the benefits of choosing Chime.

  • Get Paid Early

While the rest of your colleagues are waiting for paychecks, Chime transfers your money two days earlier.

  • Fee-Free ATMs

Besides, Chime has over 60,000 fee-free ATMs at convenient locations like Walgreens, CVS Pharmacy, and 7-Eleven.

  • Fee-Free Overdraft

Traditional banks make billions of dollars from overdraft fees each year. It is a good thing that Chime does not make a profit from your financial troubles. Instead, they offer overdrafts up to $200 without a fee.

  • Grow Money Faster

It is possible to grow your money faster with a High-Yield Chime Savings Account. It has a 0.50% Annual Percentage Yield (APY), which is 10x better than the national average.

  • Convenience

You can use your Chime debit card anywhere a Visa card is accepted. This includes the U.S and abroad without incurring foreign transaction fees. Besides, you can add the debit card to your Google Pay or Apple Pay mobile wallet.

Why You Should Choose Cash App

cash app

Here are the benefits of choosing Cash App.

  • No Fees

Cash App operates similarly to Chime. There are no monthly fees, transfer fees, inactivity charges, or foreign transaction fees.

  • Saves Money

Cash app has features like ‘Cash Boost’ to help you save money. You can choose a specific boost on your Cash Card to enjoy special discounts at selected outlets. The discounts could be a percentage off your local store, cashback in Bitcoin, or an MTA discount.

  • A Platform to Invest

Did you know you can buy stock in companies using little money? Cash App makes this dream possible. You can use the money in your Cash App account to invest in stocks. There is no limit on how little or much you can invest.

  • Cash Bonus

Cash App awards you a $5 cash bonus when friends join the app using your referral code. The higher the number of people you refer, the better the cash bonus.

Chime Company History

Chris Britt and Ryan King founded Chime in 2013. Their goal was to develop a banking approach that did not make money from customers’ misfortunes. They wanted an approach that would improve the financial state of their clients.

Chime had its official launch on April 15, 2014. Since the banking world was undergoing digital transformation, Chime came up with an app to help clients audit their balances, clear inquiries easily, and control their credit cards.

In addition, the digital bank did away with monthly fees and overdraft fees. Since its target group was young adults and millennials, the founders saw the need to align their products and services with consumer’s best interests.

For these reasons, Chime has become a grand success. It acquired Pinch in 2018 to help college graduands and young adults manage their financial assessments. As of September 2020, the company had a $14.5 billion valuation. It currently serves over 8 million active users.

Chime partners with Bancorp Bank and Stride Bank, N.A. for banking services. Besides, the bank accounts are FDIC insured up to $250,000 standard maximum per depositor.

Its major investors include Crosslink Capital, Cathay Innovation, Aspect Ventures, and Menlo Ventures.

How Chime Works

Chime relies on card interchange revenue as its primary mode of monetization. When you open an account with Chime, they issue you a free debit card for daily in-person and online purchases.

However, you will not be charged extra when making purchases with the card. On the contrary, the merchant providing the purchased goods or services will pay a small percentage to the card network and Chime. The small percentage is referred to as Merchant Processing Fees.

Depending on the type of purchase, the daily interchange rates vary between 0.5% – 2%. This may not seem as much. But with over 8 million active users making daily purchases with their debit cards, Chime does generate a sizeable income.

Features of Chime

Here are the features of Chime

  • Chime Spending Account

Chime’s spending account, also known as a checking account, is popular as it has zero fees. This means that you do not need a minimum balance or pay monthly account fees.

Besides, once you establish direct deposit to this account, you can accelerate your paycheck as early as two days!

  • Chime Savings Account

Chime also offers high-yield savings account with 0.50% APY. There are no limitations on the interest you earn as long as the account has money. What’s more, there are no monthly charges or minimum balance required.

Here is the catch with Chime Savings Account. You can save money with “Save When You Spend” or “Save When I Get Paid Feature.”

What is the difference?

“Save When You Spend” rounds up your purchases and transactions to the nearest dollar and saves the extra cents. For example, if your purchase was $44.50 at the store, Chime will deduct $45 from your account. It will also deposit the extra 50 cents into your Savings Account.

On the other hand, you can opt for “Save When I Get Paid.” This feature allows you to automatically transfer 10% percent of your paycheck into your Savings Account.

Either way, Chime Savings Account helps you improve your financial state.

  • Chime Credit Builder Card

The credit card builder helps users with poor or no credit improve their ratings. It is a secured credit card where you move money into the account, but you cannot spend more than the limit. This, in turn, helps you build a credit history.

The Credit Builder Card has no credit check, fees, or annual interest.

  • Pay Friends

It is now possible to transfer money from a Chime account to non-members. The “Pay Friends” feature allows for immediate transfers.

However, there is one shortcoming. You cannot reverse or cancel a wrong payment with it. Therefore, ensure you confirm the details before sending money.

Cash App History

Cash App, previously known as Square Cash, is a user-friendly peer-to-peer mobile payment app. It was launched in October 2013 by Square and was developed to help users transfer money using a phone app. It competes with services such as Venmo, Google Pay, and Apple Pay.

Square also introduced Cash App for businesses in 2015. The app allowed individuals, business owners, and organizations to use a $cash tag, a unique username, or identifier for sending and receiving money.

From January 2018, users could use Cash App to purchase bitcoin cryptocurrency. As of December 2019, the app had over 24 million active users.

How Cash App Works

Unlike Chime that depends heavily on card interchange revenue, Cash App makes money from charging businesses and individuals using the app.

Cash App receives 2.75% per transaction from businesses receiving payments through it. The payments can be made through peer-to-peer payment using the app or through a cash card.

It also makes money from individual users looking to expedite transfers. They face a 1.5% fee to transfer money from their Cash App account to a bank account.

The mobile app also makes money from Bitcoin Exchange. The service was free in 2017, but charges popped in late 2019. Now, users pay up to 1.76% on Bitcoin purchases. And that’s not all. When Cash App factors bitcoin exchanges, it includes a difference of 1% to 4%. This means that with every Bitcoin exchange the app facilities, there is a generation of additional revenue.

Features of Cash App

Here are Cash App features.

  • Cash Card

Cash App has a free visa debit card (cash card) that lets you make purchases from your Cash App balance. It is compatible with Google Pay and Apple Pay. Besides, it does not need to be linked to your non-cash debit card or bank account.

To apply for the cash card, you need to be 18 or older. You can personalize it by adding your signature or doodle art.

  • Cash Card Boost

Imagine a world where you can save up to 15% on your daily expenses! Well, Cash App provides that with its Cash App Boosts. This is a reward program for consumers who use Cash App Cash Card. You stand to earn discounts when you make purchases with the debit card at eligible outlets.

  • Cash App Investing

This feature allows you to make your dreams come true. With as little as $1, you can own a slice of that company you love. And as the company excels, you generate profit.

To open a Cash App Investing account, you need to provide:

a) Your full name

b) Date of birth

c) U.S residential address

d) Social security number

e) Employment status

f)  Name of Employer

However, this Cash App feature is only available to U.S residents.

  • Bitcoin Exchange

Cash App has simplified Bitcoin exchange. It allows you to buy, store, sell, deposit instantly, and withdraw Bitcoin on the app. Cash App serves as a custodial wallet and a Bitcoin Exchange.

Besides, it is easy to trade. Simply click on the ‘Buy or Sell Bitcoin’ on the app, then choose the ‘Buy’ or ‘Sell’ button.

  • ACH Transfers

Unlike Chime, this neobank allows direct deposits and ACH transfers in the user’s Cash App account. You only need to provide your correct banking information to establish an ACH. Then you’ll receive a recurring transfer of the direct deposit or paycheck.

Factors to Consider When Choosing Between Chime vs Cash App

If you want to settle on one of the mobile banking platforms, look into these factors.

  1. FDIC Insurance

Chime partners with The Bancorp Bank and Stride Bank, N.A, which are FDIC insured. This means that your money is safe in case of bank failure. Sadly, Cash App is not FDIC insured.

  1. Credit Card Fees

Chime charges zero fees and interests with its Credit Builder card, which makes it user-friendly. With Cash App, you incur a 3% charge when you send money through a linked credit card. Although this rate is inexpensive compared to other money transfer apps, it does not match Chime.

  1. Trading with Cryptocurrency

If you are an investor looking to trade with cryptocurrency, Cash App allows you to buy and sell Bitcoins. What’s more, it is easy to set up an account and start trading.

  1. Investing

Apart from trading with Cryptocurrency, Cash App allows traders to invest in stocks. Moreover, users can transfer their investments to brokers to make automatic investments.

  1. Available Services

When choosing between Chime and Cash App, keep in mind the services you require. Chime offers checking and a savings account. Therefore, if you need a banking option with minimal options, choose Chime.

On the other hand, Cash App allows cryptocurrency exchanges, online trading, ACH payments, and personal and business accounts.

Summary

Cash App and Chime are great and convenient online banking options. Chime allows quick, direct deposit, charges no monthly fees, has a 0.50% APY high-yield savings account, and fee-free ATM access across its network.

Cash App, too, has its benefits. One can receive direct deposits, ACH payments, invest, trade with cryptocurrency, and make safe money transfers.

It comes down to you to choose the best banking option between Chime and Cash App.

Related Questions

Why Did I Get Denied for Chime?

Likely, the personal information you keyed in when applying for a Spending Account could not be verified by Chime’s third party.

Can I Use Cash App with Chime?

Sure! You can send money from Cash App to Chime and vice versa. However, you need to link the two via debit card or via bank account.