Is Chime Bank a Real Bank?

Is Chime Bank really a “bank”? Well, I’ve figured this out.

Chime is a financial technology company that collaborates with other banks to provide its customers with various banking services. The Bancorp Bank and Stride Bank are the two banks that offer Chime’s services, and both of these banks are members of the Federal Deposit Insurance Corporation (FDIC).

In this blog, I’ll uncover the truth about Chime. Is it a real bank? Or is it something else entirely? Let’s find out!

Chime Is Not Your “Traditional” Bank

Chime is a financial technology company. And it offers banking services to its customers. But it’s not actually a “real” bank. Wait, what? How does that work?

Let’s dig deep and explore this fascinating concept.

So, Chime is not a “traditional” bank. Here are a few facts about it revealing its real identity:

  • Chime is what’s known as a neobank. 
  • It is a digital-only financial institution without any physical branches.
  • It operates solely through a mobile app or website.
  • It teams up with other banks to offer its customers banking services. 
  • This is known as a “banking as a service” model.
  • The two banks that provide Chime’s services are The Bancorp Bank and Stride Bank.
  • Both of these banks are FDIC members. But Chime is not.
  • Neobanks like Chime often offer more competitive rates and fees than traditional banks.

Deposits made with Chime are insured up to $250,000. This is just like they would be if you opened an account with a traditional bank!

No Direct Relationship With Chime

But here’s where it gets interesting! When you open an account with Chime, you’re not actually opening an account with The Bancorp Bank or Stride Bank. Instead, you’re opening an account with Chime itself. 

Thus, you don’t have a direct relationship with Chime’s partner banks. So, when it comes to the banks they work with, Chime acts as an intermediary between you and the banks.

Since you don’t have a direct relationship with Chime, keep in mind that:

  • Chime can cancel your account without notice. 
  • And about Chime’s cancellation policy? Well, remember that Chime is not required to provide a reason for the cancellation. 
  • If it cancels your account, you’ll be left without the safety net (of rights and protections) that comes with a traditional bank.

So, if Chime decides to close your account, it might not give you a ‘why’! And if that’s not enough, you can’t appeal to banking regulators to help you resolve it if you find yourself in a disagreement with Chime or its partner banks.

The Perks

Even though Chime may be risky, many use its services because of their benefits. For example:

  • No high monthly fees or overdraft charges to worry about with Chime.
  • You don’t need a minimum deposit or balance to open an account. 
  • It offers some sweet perks like early wage access and savings automation, unlike a traditional bank.
  • Mobile deposits

So, Chime is not technically a bank. But it works with other banks to offer you some excellent banking services.

Of course, there are some risks involved. But many people find the benefits outweigh the potential drawbacks.

So, if you’re searching for a banking option that won’t break the bank, Chime might be worth checking out!

The Truth About Why It’s Often Mistaken for a Bank

Chime is often considered a “banking alternative” or “online bank.” The reason is many people aren’t aware of the subtle differences between various types of financial institutions.

More specifically, a traditional bank and a neobank, in this case.

But do you know Chime had to tweak its marketing strategy a bit? For it is not a “real” bank. 

Let’s find out how:

Marketed Itself as a Bank

In 2021, Chime signed agreements with two state financial regulators, the California Department of Financial Protection and Innovation and the Illinois Department of Financial and Professional Regulation. 

And those agreements weren’t a cheap lesson to learn either! After all, Chime had to:

  • stop using the URL “”
  • change its use of the word “bank” in its marketing materials
  • add disclaimers to its marketing and product text to clarify that it is not a bank
  • pay a settlement fee to the state of Illinois. A whopping $200,000!

So, it had to cease and desist calling itself a bank.

Offers Fee-Free Banking Products 

Now, Chime can’t call itself a “bank” anymore. But it has been offering many fee-free banking products. These include:

  • checking accounts with no minimum balance
  • an automated savings feature
  • early wage access

Chime introduced SpotMe in September 2019. It is a free overdraft service. It enables customers to overdraw up to $200 without getting hit with any overdraft fees. After reaching the limit, purchases are denied, but without the typical negative balance fees. 

In June 2020, Chime launched Credit Builder. It is a credit card that aids customers in establishing their credit history. There are no fees or credit checks. Just a refundable security deposit. On-time payments are reported to credit bureaus. This helps customers improve their credit scores.

So, Chime, with its marketing tactics, had portrayed itself as a bank before the agreement was made. Plus, the amazing banking products it offers. And the result has been a case of mistaken bank identity!

Final Thoughts

Chime is not a traditional bank but a neobank. So, it collaborates with other banks to offer you all the fantastic banking services you could ask for! 

Chime might not fit the traditional definition of a bank. But it still showers its customers with the perks of fee-free banking products, such as checking accounts with no minimum balance, an automated savings feature, and early wage access. 

Sure, there are some risks with Chime Bank, like the chance of sudden account cancellation. But many people think the pros are worth taking a chance on! 

So, if you’re looking for a banking option that’s a little different from the norm, why not give Chime a try? It may be worth checking out what Chime has to offer.