Chime, Varo Launch Free Programs to Pay Account Overdrafts

Spencer Tierney
By Spencer Tierney 
Edited by Carolyn Kimball
Chime, Varo Launch Free Programs to Pay Account Overdrafts

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Editor's note, Nov. 19, 2020: Varo's overdraft program has been discontinued.

Chime and Varo customers who fall into the red with certain checking account transactions may find that their provider will cover them — and without a fee.

The two mobile banking firms launched similar no-fee overdraft programs within days of each other (see below for more information from Chime). These are the equivalent of the overdraft coverage service that traditional banks offer for a fee, typically around $34 per transaction — one of the steepest fees that banks charge.

Chime says: "Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC."

How they differ

Chime’s SpotMe® may cover customers whose checking accounts dip as much as $200 past the money available (eligibility requirements and overdraft limits apply). Varo’s No Fee Overdraft program will cover transactions only up to $50 over the account balance.

Chime covers only debit card purchases, while Varo helps customers with purchases, transfers, checks and bill payments.

Chime's SpotMe®

Varo's No Fee Overdraft




Maximum overdraft limit


Customers’ personal limits vary from $20 to $200, based on time as a Chime customer, account activity and deposit amounts.


Transactions covered

Debit card purchases only

Debit card purchases, online transfers, bill payments and checks

Who is eligible?

Chime customers who:

  • Receive monthly direct deposits of $500 or more.

  • Varo customers who:

  • Receive monthly direct deposits of $1,000 or more.

  • Make at least five debit card purchases a month.

  • Chime says: "Chime SpotMe is an optional service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each month. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member's Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime's discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won't cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions."

    Options at other financial institutions

    Other banks have similar fee-free alternatives to traditional overdraft services, such as allowing customers to overdraw up to $5 before charging a fee. The prepaid debit card Netspend has a free program called a “purchase cushion” that may cover up to a $10 overdraft.

    Netspend charges additional regular fees and lacks some of the banking features Chime and Varo offer, such as check-writing and a free ATM network, including Allpoint, Moneypass and Visa Plus Alliance ATMs for Chime (see below for more information from Chime). (To see more details, including about their free checking accounts, read NerdWallet’s Chime review and Varo review.)

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

    More details

    Both Chime and Varo require customers to have monthly direct deposits to use the programs, and Varo tacks on an additional qualification of making at least five debit card purchases monthly. Banks typically don’t require direct deposits or a set number of monthly payments for customers to take advantage of overdraft services.

    Transactions that go past the banks’ overdraft limits or aren’t covered by the programs would be rejected without a fee. But even Chime’s and Varo’s limited bailouts could be helpful for customers. Across banks, debit card transactions that result in overdraft fees are often small; the median amount is $24, according to a study by the Consumer Financial Protection Bureau.

    Neither Chime nor Varo offers other overdraft services common at many banks, such as overdraft lines of credit or overdraft protection transfers linked to a savings account. While these typically carry fees, they don’t have as low an overdraft limit as $20 or $50. You can find some banks with cheap overdraft programs.

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