Chime Takes on Traditional Banks: Why It is Winning Over

March 25, 2023

Chime’s fee structure is more customer-friendly than traditional banks, as it doesn’t charge monthly service fees, account minimum fees, or debit card fees.
Chime lacks physical locations and has a limited range of account types, making traditional banks a better option for those who require in-person assistance or more diverse account options.
The account opening process with Chime is more straightforward and can be done entirely online, unlike traditional banks that often require appointments and in-person visits.
Chime does not offer business accounts or investment options, making traditional banks a better choice for those seeking such services.
Although Chime is not technically a bank, it partners with actual banks (The Bancorp Bank, N.A. or Stride Bank, N.A.) to offer banking services.

Many newcomers to online-only banking often wonder, is Chime better than a traditional bank?

As an ex-banker, I can say with confidence that:

Chime is better than traditional banks in a lot of ways. I wouldn’t say it’s better outright, though or that it’s better for everyone. It depends on what you’re looking for from your financial institution.

Chime is mostly used by millennials, the younger generation who need somewhere to receive their direct deposits and an easy way to send money to their friends.

Traditional banks offer those features, but at a cost.

The younger generation isn’t using their bank for all that much beyond what I listed above, so fees can be a dealbreaker.

That’s where Chime comes in, offering little to no fees and stealing all of the competition from traditional banks.

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Does Chime Have Any Physical Locations Like Traditional Banks Do?

This is where a traditional bank may win out.

Chime, as an online banking account, doesn’t have any physical locations you can go to. Traditional banks usually have hundreds, if not thousands of locations scattered across the country.

Capital One even has locations that have merged with places you can buy coffee, called Capital One Cafes.

I visited one a few weeks ago for the site and had a great time.

Capital One can offer their customers a cappuccino while they’re getting support, Chime cannot.

Chime doesn’t have any physical locations for their customers to go to.

As an ex-banker, I know how important it is for a lot of people to get service in person. Some people just can’t be helped as easily over the phone or online, no matter how simple the solution may be.

I had plenty of customers come into the branch looking for me to help them with things they could have done on their own.

Maybe they couldn’t do it, or maybe they plain didn’t want to, but it didn’t matter. What did was the fact that a real person existed to help them — a fact that makes all the difference.

Chime does offer ATMs to their customers who want to grab some cash.

They have a network of ATMs that can be withdrawn from at no cost, and provide a handy map on their app. That’s about it in terms of physical locations though.

Chime’s app works well and is easy to interact with, but that’s all they have.

If you need customer support from Chime, you’ll have to get it through your phone or your computer. This is an area where traditional banks are better than Chime.

Does Chime Have Any Fees?

Chime’s fee structure is much better for their customers than just about every major bank out there; mainly because there are none.

Chime doesn’t charge a monthly service fee, account minimum fee, or a fee to get a debit card. It’s all free.

This may seem standard, but only because companies like Chime have made it so.

Traditional banks have always charged their customers wherever they could, especially if the customer didn’t have very high balances with the bank.

Banks make their money off of investments, usually, or interest on the securities they hold. They also make a decent percentage of their earnings from fees, fees like monthly service fees, account minimum fees, or overdraft fees.

These fees can add up too; most banks that charge an overdraft fee charge somewhere around $34. Monthly service fees can start around $12 a month, with some accounts charging $35 a month.

Chime doesn’t charge any fees. They don’t charge a fee to open an account, nor do they require their customers to keep a certain balance to keep their accounts free.

They even have an overdraft protection feature called SpotMe, allowing their customers to overdraft up to $200 without incurring any fees or penalties.

Traditional banks may charge a myriad of fees for a multitude of different reasons.

$34 here, $35 there can add up quickly when you’re just looking for a place to store your money.

Chime charges no fees, and is much better than traditional banks in this regard.

Is Chime Better Than a Traditional Bank for Opening Accounts?

When I used to work for Chase, I would open several accounts a day for my customers.

They would range from a high schooler’s very first checking account to a married couple opening a brand new account together.

Opening accounts wasn’t the hardest process, but there were a lot of requirements.

First, my customer’s needed two pieces of identification; a primary and a secondary piece. Next, they needed to set an appointment with me, as I was very busy in my branch.

Once that was all out of the way, they would then have to come into the branch in person and answer a lot of questions pertaining to their work and financial histories.

The whole process took about an hour, and there wasn’t really a way for me to speed up the process for my customers.

During my final days at Chase, the company was experimenting with a new tool — a tool that would let customers open accounts on their own.

Customers would have to go to Chase.com and create an account to do so.

They were only able to open the most basic account Chase offered and weren’t allowed to add anyone else onto it unless they came in person, but they were able to open it nonetheless.

While Chase and other traditional banks may offer their most basic services online, Chime offers everything they’ve got.

If you’re at home, sitting on your computer, you can access everything Chime can give you, all without having to set an appointment.

Chime doesn’t have the widest range of account types either (something I’ll get into later), but compared to the accounts traditional banks will let you open on your own, they’re fairly similar.

Traditional banks make you set an appointment, find your social security card, and sit down for an hour in person just to open an account.

With Chime, you can open up an account for yourself at home, giving the online bank a clear advantage in this category.

How Many Different Accounts Does Chime Offer?

Chime, to their credit, is simple and straightforward in their approach to online banking.

They offer a no frills online platform with basic checking, savings, and credit based accounts.

While this may be a strength for some, the lack of account diversity may be a weakness for others.

Chime offers a single checking account, a single savings account, and — you guessed it — a single credit card.

This is great for people who may be new to banking and don’t want to overcomplicate things for themselves, but for those of us who are a little more experienced and are looking for more from our bank this is a pretty major setback.

Taking Chase Bank as an example again, Chase has four different types of checking accounts I could get right now.

They each have different requirements as well as benefits, with each account being tailored to people in different financial situations.

Chase is much better equipped to help the customer who’s looking to bring over large balances.

They can offer free accounts as well as competitive interest rates and waived fees on out-of-network ATM withdrawals and wire transfers.

Chime offers their accounts for free, but that’s about it.

Again, if you’re new to banking and only need an account for smaller activity, Chime may be right for you.

If you’re in need of a larger network and more options, traditional banks win this category instead.

Can I Open a Business Account with Chime?

Before I worked at Chase, I had no idea business accounts were a thing.

Well younger me, they are, and they’re popular.

Business accounts are owned and operated by business owners ranging from the guy that owns your local bakery to the board of directors that manages your nearest Fortune 500 company.

Chase, like other traditional banks, not only offers business accounts but offers several types of them.

Accounts for sole-prop owners to accounts for successful business magnates looking to expand. Chime on the other hand, doesn’t.

Chime offers personal accounts only.

If you want to open a business account with Chime, you’ll have to look elsewhere (probably towards a traditional bank).

Traditional banks usually have a dedicated department for business banking as well.

Chase has their own customer support team that focuses on business account owners, helping them with whatever problem that may arise.

They also provide merchant services, payroll tracking software, and low fees, making them an alluring option for any small business owner.

Chime again doesn’t offer any such services, or business banking in general, so if you want to open a business account with someone, traditional banks are better than Chime.

Can You Invest With Chime?

Many fintech companies started as basic transfer platforms, allowing users to send money to each other quickly and securely.

They have since expanded into online banks that offer checking and savings accounts, as well as ways to invest.

Unfortunately, Chime doesn’t fall in that category.

They don’t offer any stocks or cryptocurrency for their customers to buy, so if you’re looking to invest you’ll have to look elsewhere, or just over to traditional banks.

A lot of traditional banks are putting more and more of their own money into their investment platforms. Chase has a feature called You Invest, and it’s their first way of letting customers invest on their own.

Investing on your own has become more popular than ever with the rise of Robinhood, Webull, and other investment platforms.

Traditional banks have taken note and have begun to create their own investment platforms as well.

If you’re wanting to buy some of your favorite company’s stock, or try your hand at investing in cryptocurrency, you can do so through traditional banks.

Not through Chime.

Is Chime Better Than a Traditional Bank?

I wouldn’t say Chime is better than a traditional bank, but I wouldn’t say it’s worse.

Chime is a more simplified, more streamlined version of a bank, cutting off everything it thought was unnecessary to pursue an end product that was specialized in its focus.

Basically, what I’m trying to say is that Chime is great at what it tries to do, and that’s to be an online bank for people who may not qualify for a traditional bank’s checking account.

If you have millions of dollars, traditional banks may be the route for you. But, if you’re new to banking, underbanked, or unbanked altogether, Chime might be the perfect online back for you.

Is Chime a Bank?

Venmo, Paypal, Cash App and Chime: all these fintechs and “online banks” are popping up, but are they really banks at all?

Technically no, they’re not. All of these companies, Chime included, are financial technology companies, or fintech companies for short. They each partner with an actual bank who do the heavy lifting behind the scenes.

So Chime isn’t a bank, even though they offer a lot of the same services a bank might. The two banks Chime uses to offer their banking services are The Bancorp Bank, N.A. or Stride Bank, N.A.

What is Chime’s Savings Account Interest Rate?

Chime offers a simple savings account for users who are interested in creating a financial goal and finding a way to get there.

Chime’s savings account has a very competitive rate, offering 2.00% APY. For a high-yield, liquid savings account, that’s not a bad deal at all.