Compare digital banks in the US

The three best digital banks

Out of all the digital banks we’ve reviewed, these three come out on top.

Chime Spending account

Finder Rating: 4.7 / 5

★★★★★

Apply nowat Chime Bank's secure site

N/A
APY

None
Fees

None
Min. opening deposit

• Pros & cons
• Details

• No hidden fees. Chime doesn't charge anything for monthly maintenance and foreign transactions.
• Free overdraft protection. On overdraws up to $100, Chime will spot you the difference for free and deduct it from your next direct deposit. But you must have at least $500 in monthly direct deposits to qualify.
• Automate your savings. Open Chime's optional savings account and earn 1% APY on your total balance. Plus, use savings tools like round-ups and automatic transfers to grow your nest egg.

• Only two accounts. Chime only has a checking and a savings account, and you must open the checking account to qualify for the savings account.
• No joint accounts. You can't open any Chime accounts jointly with a partner, family member or friend. You also can't request a secondary debit card.

APY	0%
Account fees	$0 monthly
Can the fee be waived?	No
ATM transaction fee	$0
Foreign transaction fee	0%
Overdraft fee	$0

Varo

Finder Rating: 4.7 / 5

★★★★★

Read review

N/A
APY

None
Fees

None
Min. opening deposit

• Pros & cons
• Details

• Minimal fees. You won't pay any fees for monthly maintenance, overdrafts, transfers, foreign transactions and card replacements. But you'll pay $2.50 for non-network ATMs.
• Early payday. Enroll in direct deposits and get your paycheck and government benefits up to two days earlier than you would with a traditional bank.
• Accepts cash deposits. Deposit cash at over 90,000 Green Dot locations nationwide, unlike most digital banks that don't accept cash deposits at all.

• Only two accounts. Varo doesn't offer any CDs or business accounts. And you must open a checking account before you can open a savings account because they're linked.
• No live chat. Unlike other digital banks, the only way to contact customer service is via phone and email.
• No checks or wire transfers. Varo doesn't support checks or wire transfers of any kind.

APY	0%
Account fees	$0 monthly
Can the fee be waived?	Yes
Insufficient funds fee	$0
ATM transaction fee	$0
Foreign transaction fee	0%
Overdraft fee	$0

Simple

Finder Rating: 4.5 / 5

★★★★★

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Up to 0.5%
APY

None
Fees

None
Min. opening deposit

• Pros & cons
• Details

• Several product options. Unlike most digital banks, Simple has a suite of products including a high yield checking account, a joint account, a savings account, CDs and personal loans.
• Budgeting tools. Simple has a built-in budgeting tracker to help you stay on top of your expenses and keep your balance from going in the red.
• No fees. As with most digital banks, there's no minimum opening deposit to start and you won't be charged fees for monthly maintenance, overdrafts, transfers or card replacements.

• No bill pay. Simple doesn't offer electronic bill pay services. Instead, you'll need to buy a pack of personal checks and send them yourself.
• No cash deposits. Like most digital banks, you can't deposit cash into any Simple bank account.

APY	0.5%
Account fees	$0 monthly
Can the fee be waived?	Yes
Insufficient funds fee	$0
ATM transaction fee	$0
Wire transfer fee	$0
Overdraft fee	$0
Accout closure fee	$0

What is a digital bank?

Like the name suggests, a digital bank operates digitally, usually from an app, rather than from a physical branch or office. A digital bank is a fairly loose term — the correct industry name for these banks is a neobank.

A neobank is a completely digital bank that doesn’t use any existing legacy systems to operate. This means the bank doesn’t use any physical infrastructure or digital operating systems that are already being used by existing financial institutions. The technology used by these fully digital banks is developed from scratch.

What other digital banks have launched in the US?

There are a number of digital banks operating overseas that plan to launch in the US in the future, including:

• N26. This German challenger bank lets you divide your money up into Spaces, or subaccounts, to help you budget and save. N26 launched in the US in July 2019.
• Revolut. This UK-based bank was created with travelers in mind, offering low fees for international purchases, withdrawals and money transfers.Revolut launched in the US in March 2020.
• Glint.This UK-based banks brings an old concept into the digital age. Glint lets you store your money as gold so that it’s less vulnerable to the economic factors than can impact a country’s currency. US customers can already use the app to buy gold, but Glint plans to launch a debit card that allows you to spend your gold or exchange it for US currency at an ATM in the near future.

What are the benefits of a digital bank?

There are several perks of using a digital bank. Among them:

• They understand your habits. Digital banking apps have spending analysis features that evaluate where your cash is going. Look for automatic spending categorization, notifications, alerts and monthly reports.
• You can sync them with your budget. Use the spending analysis to set up budgets and track progress. The app may allow you to set goals and spend limits to make veering off course more difficult.
• Traveling perks. Some digital banks can make traveling easier by holding multiple currencies at once, skipping international ATM or foreign currency fees and locking or unlocking your card if it gets lost or stolen.
• Automated savings. Some digital banks prioritize stashing cash away. For instance, rounding transactions to the nearest dollar and sending the difference to your savings account.

What are the drawbacks of a digital bank?

Digital banks won’t suit everyone’s tastes. Before opening an account, consider these potential pitfalls:

• No in-person help. If you’re looking to navigate a complex financial plan with the aid of a professional, you might want to stick with a more traditional setup.
• Smaller product offerings. While industry giants also offer loans, mortgages and investment accounts, digital banks tend to specialize in checking and savings.
• Compatibility may be limited. Make sure your smartphone can handle whichever digital bank you choose — not all operating systems may be supported.
• Technical reliance. Technical difficulties could derail your ability to access and manage personal finances, which might present too big a risk for some.
  

What’s the difference between a digital bank and an online bank?

Many banks in the US appear to be digital banks — they don’t have branches and customers use mobile banking apps to control their money — but that doesn’t mean they are. This table breaks down the difference between digital banks and online banks:

Online banks aren’t 100% digital banks

Many people refer to American Express and Discover as digital banks because they don’t have any physical branches. However, these banks aren’t neobanks because they rely on existing banking infrastructure and operate like a traditional bank.

Can a digital bank really replace my traditional bank account?

It depends on your personal needs. Banking apps let you fully manage your accounts — savings, checking and more — through your smartphone or computer. If you’ve never stepped into a branch location and don’t plan to anytime soon, switching over might make sense.

But remember that you don’t have to cancel your traditional bank account to use a digital bank. Having multiple bank accounts does not affect your credit score.

Are digital banks safe?

Digital banks need to have the same banking licenses and approvals as existing US banks before they’re able to offer products and services to consumers. These new banks will be regulated by the Federal Deposit Insurance Corporation (FDIC) and the US Securities and Exchange Commission (SEC) in the same way that existing banks are regulated.

Your deposit of up to $250,000 with an FDIC-insured bank is protected by the US government. This means if something were to happen to the bank, your money (up to this amount) would be safe. Note that some of the digital banks mentioned in this guide are not yet considered banks and haven’t yet been licensed or FDIC-insured.

How do I sign up for a digital bank?

The sign-up process varies between providers. You can generally start by downloading the provider’s app to your smartphone. Then, verify your identity by providing an ID such as your driver’s license or passport. You’ll also need to send personal details such as name, address and contact information. Some apps will send you a physical card, while others allow you to start spending instantly with a virtual debit card.

For new digital banks, you may need to join their waitlist by visiting their website. Once their product launches they’ll send an announcement to those on the waitlist first.

What is app-based banking?

App-based banking is any sort of financial institution or tool that you control primarily through an app. There are several advantages to app-based banking:

Things to know about app-based banking

Using your phone as your main point of contact with your bank can save you time and give you more control over your finances, but there are a few things to be aware of.

• Potential credit check. If you’re planning to apply for a new checking account or credit card, your bank may pull your credit file in order to assess how likely you are to overdraw the account.
• Money may not be FDIC insured. Most banks are insured by the FDIC, which means your deposit of up to $250,000 is backed by the US government. Not all app-based banks have this same protection. You can use the FDIC’s BankFind tool to learn if your bank is FDIC insured.
• May not have rewards and perks. App-based banks aren’t always able to offer the financial rewards, such as signup bonuses, that are common at many big banks.
• May not be a bank in the traditional sense. Some banking apps work alongside your pre-existing accounts to gather all your spending data in one place, offer you insights into the way you spend your money and suggest ways to improve your finances.

What are the different types of app-based banking?

App-based banking encompasses a lot of different financial products, including:

• Digital banks. Digital banks rely on new, innovative technology and are generally app-based.
• Traditional bank apps. App-based banking doesn’t only apply to neobanks, it’s also becoming increasingly possible to bank on your smartphone with traditional banks such as Chase and Bank of America, both of whom have highly-rated mobile apps where you can control your money.
• Apps that help you save. One of the most common reasons for people heading away from traditional banks and towards app-based banking is how easy app-based banking makes it for people to save money. This includes everything from budgeting apps like Cleo to cashback apps like Ibotta.
• Prepaid card apps. Companies like NetSpend let you control a prepaid debit card from an app so you can track your transactions and see exactly how much money you have left.
• Investment apps. Apps like Robinhood and Acorns let you invest in stocks from your phone so that you have more control over your finances.

Bottom line

Digital banks are getting a lot of hype right now, and for good reason. They often cater to specific niches and groups and they’re known for offering innovative apps. But before you ditch your current bank, take the time to read through all of the fine print to make sure the bank you’re interested in is as good as it sounds.

Frequently asked questions

• How can I tell if a bank is insured by the FDIC?

  Use the FDIC’s searchable database to find out if a bank is FDIC-insured.

• Are digital banks secured by the FDIC?

  Many digital banks are backed by the FDIC. To confirm, search for your provider on the FDIC website.

• How do I get help if there are no bank branches?

  Digital banks often have multiple ways to contact customer service, including via online chat, email and phone. Check with the bank you’re interested in to find out how they handle customer support before signing up.

• Do I have to close my traditional bank account before signing up with a digital bank?

  No. You can hold two or more transaction accounts at once if you want to. This may be a good idea if you aren’t sure whether the new bank app you’re signing up with is going to be right for you. This way, you can try out the app for a while and see if it suits your needs.