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How to Avoid Banking Fees and Experience Faster Paycheck Deposits

couple calculating bills
Pexels/Mikhail Nilov

Managing finances through checking and savings accounts and dealing with banks is a part of adult life. In fact, many people use their checking and savings accounts to easily get paid and save for future major purchases. However, there are several banking fees associated with such accounts, which could cost you a significant amount of money in the long run.

Traditional banks usually charge various fees for the features and banking services they offer, like account maintenance, foreign transactions, wire transfers, and even SMS and smartphone notifications. Not only that, but they also impose several other fees, like out-of-network ATM cash withdrawals, savings withdrawal fees, overdraft fees, which can be ridiculously high, and some even charge minimum account balance fees, as well.

According to a survey conducted by Forbes in 2021, traditional banks charge, on average, $5.14 a month for account maintenance and $24.93 in overdraft charges, which are charged when your account balance goes below zero. So, hypothetically, if you buy a $3 cup of coffee using a card with only $2 on it, you're actually paying nearly $30 for that cup of coffee.

But that's not all. According to another survey conducted by the Federal Deposit Insurance Corporation (FDIC) in 2019, it is estimated that 7.1 million U.S. households had no checking or savings account at the bank, primarily due to low income. So, as helpful as banking features and accounts may be, the excessive charges associated with having a bank account could also make a significant dent in your monthly budget.

And things only go from bad to worse if your balance is low or you're out of funds when the banking fees hit.

How To Avoid Banking Fees

Chime phone app and card
Banking for modern times. Source: Chime

Luckily, Chime can help customers reduce or even eliminate exorbitant fees often imposed by traditional banks.

Financial technology (fintech) companies, like Chime, partner with regional banks to streamline specially designed banking services through smartphone apps or computer software. And while they mainly focus on offering checking and savings accounts, and some bare-bone banking tools, fintech companies are one of the fastest-growing areas for venture capitalists. For a good reason—they offer fast and convenient online banking services with little to no fees.

Chime is one of the largest fintech companies on the market, focused primarily on the premise that basic financial services should be accessible and helpful, which is why the company's model doesn't rely on overdraft fees, monthly service fees and minimum balance requirements. Instead, the model relies on fee-free services, fast payment processing and high-interest savings accounts. This approach helps create a more competitive market with better and more accessible options for everyday individuals who aren't served well by traditional banking systems.

Here's how Chime helps you avoid service fees and allows faster paycheck deposits:

No Monthly Fees

No fees logo chime bank
Stop worrying about fees. Source: Chime

Traditional banks often require customers to have a minimum account balance, calculated as the actual dollar balance in the account, that they must maintain to receive certain benefits or simply keep the account open. In most cases, customers who fail to keep this balance will be subject to additional fees, while banks may also charge a monthly maintenance fee off the top. And since many Americans struggle with monthly expenses and live paycheck to paycheck, extra banking fees could lead to overdrafts, snowballing fees, account closure and even derogatory debt collections.

Chime doesn't have minimum account balance requirements; hence it won't charge additional fees if your account goes blank. The company also doesn't charge any maintenance fees and in-network ATM money withdrawals. However, for out-of-network ATM withdrawals the company charges a fee of $2.50˜. On top of that, Chime allows you to initiate foreign transactions in different currencies that reroute through foreign banks without a 3 percent fee employed by traditional banking systems.

No Savings Withdrawal Fees

Usually, traditional banking systems allow their customers to withdraw from their savings accounts up to six times a month, as per FDIC Regulation D. If that limit is exceeded, users may have to pay additional withdrawal fees per transaction, with rates depending on the bank.

Chime savings accounts don't have withdrawal limits and associated fees. In fact, they offer a 0.5 percent APY1 (annual percentage yield) on all savings accounts, which is 8 times greater than the 0.06 percent average provided by traditional banks. However, you must open a checking account with them to use Chime's savings account.

No Overdraft Fees

chime no overdraft fees
Overdraft fees are a thing of the past, too. Source: Chime

According to Forbes, traditional banks reaped $11 billion in overdraft fees in 2019 and $12.4 billion in 2020. On the other hand, Chime spots eligible members for up to $200* on your debit card purchases and cash withdrawals without overdraft fees. However, some eligibility requirements and limits apply—which the company determines, based on your Chime account history, direct deposit frequency and amount, spending activity and other risk-based factors.

Early Paycheck Clearing

Chime phone app and card
Get access to your cash early. Source: Chime

Traditional banks use the Automated Clearing House (ACH) system to process paychecks and larger payments. When a transaction is initiated, banks receive notice that they'll receive funds at the estimated arrival date. However, once you set up your direct deposit with Chime you get to skip the waiting time and your funds are available to you as soon as the transaction is initiated, depositing your paychecks up to two days earlierˆ when compared to traditional banking systems.

Setting up a Chime account is pretty straightforward and takes less than 2 minutes!

Start saving on banking fees, and receive your paycheck deposits faster with the help of Chime.

Chime is a financial technology company, not a bank. Banking services and debit card issued by The Bancorp Bank or Stride Bank, N.A.; Members FDIC.

^Early access to direct deposit funds depends on the payer.

˜Out-of-network ATM withdrawal fees may apply except at MoneyPass ATMs in a 7-Eleven location, or any Allpoint or Visa Plus Alliance ATM.

1The Annual Percentage Yield ("APY") for the Chime Savings Account is variable and may change at any time. The disclosed APY is effective as of November 1, 2021. No minimum balance required. Must have $0.01 in savings to earn interest.

2The average national savings account interest rate of 0.06% is determined by FDIC as of November 1, 2021, based on a simple average of rates paid (uses annual percentage yield) by all insured depository institutions and branches for which data are available. Visit https://www.fdic.gov/regulations/resources/rates/ to learn more.

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