People often compare Chime, the most popular digital bank to other, traditional and online banks. Today, we’re comparing Chime to Discover, a pioneer of online banking that has many similarities to Chime, yet is fundamentally different.
Before we dive in a bit deeper, here’s our brief verdict:
Chime offers a much simpler banking service than Discover. Its no-frills account will appeal to people not looking for an exhaustive list of financial services. Meanwhile, Discover Bank will appeal to customers that want a digital account with a wide choice of products and services at their disposal. Both Chime and Discover have almost no fees for everyday banking.
- Easy to sign up
- No monthly fees
- Early paycheck
- No overdraft fees
- Free Chime > Chime transfers
- Credit builder credit card
- Savings account
Chime was established in 2013 by Chris Britt and Ryan King; the company’s CEO and CTO. It’s a financial technology company that had to partner with The Bancorp Bank and Stride Bank to be capable to bring banking services to its customers. This partnership also gives their customers FDIC deposit protection of up to $250,000.
Fintech businesses are usually partnering with traditional banks to offer checking and savings accounts, and all other banking services. Chime’s partnership with conventional banks is, therefore, nothing uncommon.
So, what innovations and advantages do you get with a Chime account? You’ll get a free mobile app and Visa debit card that has no account fees and no dishonest fees in general. You can also get paid up to two days early if you set up a direct debit, and have fee-free overdrafts, free ATM withdrawals, a useful credit building program, and more.
- Full service online bank
- No monthly fees
- 60k+ ATMs
- 0.40% APY on savings
- 1% cash-back rewards
- A broad choice of credit cards
- Personal, student, home loans
Discover Bank is part of Discover Financial Services and was founded in 1985 when Sears, acquired The Greenwood Trust Company and renamed it to Discover Bank in 2000.
The bank is independent as of 2007 and is a publicly traded company and an FDIC insured bank. The company first launched the discovercard.com website in 1995 and offered credit card applications, and enabled customers to bills, redeem rewards, and receive email reminders.
Their first mobile app was launched in 2009 on iPhone and iPods and helped the bank find new customers and ten years later, in 2019, the bank eliminated most fees on their deposit products and services.
Discover is a digital-only bank, same as Chime and operates without physical branches. This hasn’t stopped the bank to become one of the most recognizable and most popular banks in the country.
Who should use Chime?
Chime already acquired more than 12 million users so they must be accomplishing something right. Their customers love that there are no fees and that it’s extremely easy to sign-up for the account.
If you don’t need physical branches and do all of your banking from your desktop or from an elegant mobile app, then Chime is unquestionably for you. Folks that appreciate a free bank account and having no credit history checks when applying will be happy with Chime as well.
If you have a credit score that is low or even non-existent, Chime offers a free Credit Builder Program that might interest you and will equip you with a free credit card that could put you on a path to a much better credit score. It takes a lot of time, though.
Chime doesn’t have all the financial services that traditional banks or even digital banks like Axos offer, but what it offers is exceptional.
Who should use Discover?
Discover Bank offers very competitive rates on their financial products, especially savings accounts. If you’re not keen on investing and still want to make the money work for you, their savings accounts are a solid choice.
The bank also operates an extensive network of ATMs but doesn’t have any physical branches. If you are comfortable banking from the palm of your hand and don’t care for branches, Discover is a bank for you as well.
You’ll be happy to know that they are also FDIC insured up to $250,000 and have an excellent choice of credit cards with generous rewards.
Unlike Chime, Discover has a full range of financial services and is a typical traditional bank in this regard. If you need more than bare-bones banking services, you’ll like Discover.
Pros and cons
- No minimum balance
- No monthly maintenance fees
- No foreign transaction fees
- Deposit checks via the mobile app
- Get your paycheck early
- 0.50% APY on savings deposits
- Limited financial services
- Limited cash deposit locations
- $2.50 fee for ATMs not affiliated with Chime
- No monthly fees on checking and saving
- Generous cashback rewards
- 60k+ ATMs nationwide
- Great mobile app
- FICO credit score available to check for free
- No overdraft fees
- No cash deposits
- No auto loans
How are Chime and Discover the same?
Chime and Discover are both well-established and remarkably popular with tens of millions of customers between the two. Their apps, windows into the service, have millions of positive reviews on app stores and are functional and smooth.
Discover is a branchless, digital-only bank, same as Chime, and that only helped them acquire customers at a grand scale.
Both banks also have tens of thousands of ATMs across the nation where you can withdraw money for free. There will be a $2.50 fee if you use an out-of-network ATM.
How are Chime and Discover different?
Although both of these companies are digital-only banks, there are many basic differences between Chime and Discover.
Chime also offers far fewer financial services with their simpler checking and savings account that also focuses on disenfranchised folks with no or bad credit history.
Discover is part of a bigger company with more than 17,000 employees and is a fully-fledged bank with everything that that involves. All your financial services could be met by banking with Discover. We’re talking about personal loans and home loans, CDs, credit cards, and more.
How to open a Chime account?
You must then enter your name, email and password, as well as address and your Social Security Number (SSN). This information will be used to open the account but further verify your identity.
Remember, there are no credit history checks but you will have to be a United States citizen and be older than 18 to start a Chime account.
How to open a Discover account?
Simply visit their website or download their 4.9-star app from Apple or Google. You’ll need to have your SSN, and a driver’s license, or a state-issued ID. You’ll also have to fill in your personal data such as your name, address, mobile number, email address, and so on.
Chime currently has just one checking (spending) account in its app. But it also has a high APY savings account and a useful credit building program.
The Chime checking account is, as is typical for digital banks, free and arrives with a Visa-branded debit card. It’s a no-frills bank account (Chime was forbidden to call itself a bank though). Luckily, the account is attached to an elegant mobile app that was developed by a fintech company from the onset – and you can feel it. More on the app later.
Savings account applicants will have to have a spending account already set up. Chime’s savings account comes with a rather high 0.50% APY. It’s more than the most traditional banks have on offer but below the usual savings rate of the majority of digital banks, as they normally offer higher savings rates.
There are many other highlights in the app like the automatic savings feature that will round up your transactions and put the superfluous change in the savings account, and make it easy for you to save on autopilot. Pennies and dimes can quickly add up and help you expand your rainy day fund.
There are no minimum balances and you can take out money to the savings account at any time.
The credit builder program entails a credit card that will record and inform about your purchases and on-time payments to main credit bureaus and in the process, raise your credit score. It’s a free program with no fees apart from those associated with the credit card.
Discover, on the other hand, offers one checking account, online savings account, CDs, Money Market Account, and IRA Certificate of Deposit and IRA Savings account.
Let’s start with their checking account. It’s main feature is definitely a 1% cashback debit card on up to $3,000 purchases per month. There are no maintenance fees and almost all other fees are waived as well. It’s comparable in many regards to the Chime spending account.
The bank’s Savings account has an APY of 0.40% which is much better than other traditional banks but still worse than that of digital banks. There’s no minimum deposit or balance but there’s also no ATM card to withdraw the funds.
CDs have a minimum deposit of $2,500 and a term from 3 months to 10 years and you can easily calculate how much you’ll earn on their website.
Money Market accounts have also a minimum deposit of $2,500 and a 0.30% APY up to $100k. There are almost no other fees associated with it and you can withdraw money from an ATM with a debit card.
Chime is a simple mobile banking account with free overdrafts of up to $200 (if you qualify), early payday, and a helpful credit-building plan. There are no loans or business accounts at the moment as well as no mortgages, CDs, investments, etc.
Discover is a different story and the bank offers many services apart from checking accounts. There’s a choice of mortgages, home loans, and student loans for example, as well as various savings and retirement accounts and certificates of deposit. There are no auto loans though.
Both Chime and Discover have wonderful apps that make it easy for you to manage all aspects of your accounts. The apps have almost a five-star rating on the App Store from 316k (Chime) and 3.2 million (Discover) ratings.
In Chime’s app, you can check everything from ATM locations, overdrafts, Credit Builder Program, to tracking your budget and analytics and transfer money, etc.
Discover’s app has naturally more features and abilities as the bank offers full banking services. Besides account access and management, you can do your budget and see the balance on all your credit cards and loans, as well as transfer money, and deposit paper checks by using your camera, plus view your FICO credit score, freeze and unfreeze cards, etc.
Number of customers
There’s no clear number disclosed about how many customers there are in Discover Bank. They do have almost 60 million credit card holders and are the third largest credit card brand in the United States. Only Mastercard and Visa have more credit cards in circulation.
If there are 60 million credit card holders, that means that there are many more Discover Bank customers as not everyone has a credit card (though the vast majority certainly do).
Chime has a 3.9-star rating out of 5 on Trustpilot, with 77% of 7,133 reviewers giving it an excellent mark and 9% a bad one. With a 3.9 score, Chime is placed better than Wells Fargo (2.4), BoA (1.4), Capital One (1.3), and Chase (1.3) but worse than MoneyLion (4.7), Current (4.2), and Varo (4.4).
Discover has only a 1.9-star rating out of 5 on Trustpilot, with only 18% of 122 reviewers giving it an excellent mark and 75% a bad one. With a 1.9 score, Discover is better than Capital One (1.3), BoA (1.4), and Chase (1.3), but worse than Wells Fargo (2.4), Chime (3.9) MoneyLion (4.7), Current (4.2), and Varo (4.4).
Banks and their everyday users are under continuous threat by hackers, scammers, and other cybercriminals. This is particularly true for the most popular banks in the country, which Chime and Discover are.
Chime has seen its fair share of hackers and scammers targeting its systems and customers. But Chime has also been closing possibly thousands of accounts that were and weren’t part of foul play, such as fraudulent deposits. Many ordinary customers seem to have paid the price as well, being unable to access their accounts or money for several months.
Although it has some issues, Chime is employing all the most advanced security innovations to ensure its systems and customer data are secure. We, as customers, also have to be careful not to get scammed or even hacked. It’s all too easy to fall victim these days if we aren’t careful.
Discover has had security and data breaches in the past but it’s unknown how many customers were affected. The truth is, if you have several online accounts of any kind, your data may have already been breached and is available online.
Discover does use the latest security technology and encryption services to secure your personal and account information. If you do notice fraud on your account, you can contact their fraud specialists at 1-877-737-1931 to guide you through the investigation process.
Chime and Discover alternatives
Axos Bank is a full service digital bank and should definitely be mentioned in the context of Chime and Discover. They are in business for more than 20 years already and have always been a digital, online-only bank. A true pioneer that offers low or no fees for its services and offers ambitious interest rates and a handy access to their SME, commercial, and of course, personal checking accounts via the mobile app or desktop.
MoneyLion is an excellent all-in-one financial service that makes spending, saving, budgeting, investing, and building up credit as easy as a child’s play. They recently started offering crypto investing which might lure in many new customers as well.
SoFi is a cash management account that will earn you interest. But it’s also more than that as the fintech company offers stock, ETF, and crypto investing, and many kinds of insurance and loans, including mortgages. Sofi has got it all.
Varo Bank is the first neobank in the United States that acquired a banking license. Its competitive account has no fees and is therefore great for daily banking, spending, and even traveling abroad. There’s also an outstanding savings account, early paycheck feature, and much more. All for free.
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The bottom line
Whichever of these two banks you go for, you’ll love that they have no monthly maintenance fees, excellent apps, and products designed to help your credit score. Tens of millions of happy customers means that these two banking institutions are doing a lot of things right.