5 Things to Ask Before Opening an Account at a Neobank

Neobanks like Chime have accounts with appealing perks and low costs, but they have limits.
Spencer Tierney
By Spencer Tierney 
Edited by Sara Clarke

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Easy account sign-ups, no monthly fees and high savings rates? Neobanks such as Chime and Current offer these features while many traditional banks don’t.

Neobanks are financial tech companies that usually partner with banks to offer digital-only accounts. They’ve been around for a little over a decade only, but they’re gaining traction.

About 1 in 3 Americans has a relationship with a neobank, according to a 2022 annual report by the banking advisory firm Javelin Strategy & Research. However, only 26% of neobank users open an account to replace their primary bank, and 90% of that same group use one of the 20 biggest banks as their primary bank, according to senior analyst Dylan Lerner.

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» Learn more: What is a neobank?

If you’re considering a neobank as a primary or additional place to manage your money, learn about its limits and risks beforehand and answer these five questions.

1. Do you mind if it’s not a bank?

Neobanks, by and large, are not banks themselves. And they don’t need to be to protect your money. Most neobanks partner with licensed banks to offer deposit accounts insured through the Federal Deposit Insurance Corp. FDIC insurance guarantees that you receive your money back — up to $250,000 — if the bank or company goes bankrupt.

Many neobanks also offer debit cards that belong to the Visa or Mastercard payment network. Both have robust protections in case someone makes an unauthorized charge on a card.

Tip: Double-check the neobank’s partner bank. A neobank discloses this on its website or mobile app. Then, verify that the bank is real by using the FDIC’s BankFind tool. In rare cases, a neobank is a licensed bank — such as Varo Bank and Green Dot’s GO2bank — though their mobile-focused account offerings are more like those of other neobanks than traditional banks.

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Member FDIC

SoFi Checking and Savings

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Min. balance for APY


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EverBank Performance℠ Savings

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2. Can you mostly bank on a mobile app?

A mobile app is the core of a neobank’s experience, where you’d make transfers, pay bills, view transactions, receive direct deposits and more. A neobank with a checking account or the equivalent usually mails a debit card, but being branchless means that cash and check services are limited or not available.

In offering an “easy, affordable” banking experience, “you also have to expect that comes with some sacrifices [in] functionality," Lerner says. Neobanks usually lack some traditional bank services, such as wire transfers, cashier’s checks and joint accounts.

A neobank won’t offer physical checkbooks but might deliver checks. However, neobanks’ mobile check deposit services, if available, might not accept checks above certain dollar amounts. Some providers will let you add cash to an account at various retailers such as CVS and Walgreens, but for a fee. And although many neobanks offer free access to a third-party ATM network for cash withdrawals, those ATMs can be hard to spot since they don’t have a neobank’s branding.

Tip: See how a neobank handles cash, checks or other services you may need by checking its FAQs or contacting customer support.

3. What customer support channels does it have?

A neobank may offer help through a phone line or live chat service, and if so, check the hours and days of operation. For nonurgent questions, try searching a neobank’s FAQs or emailing.

One of the biggest jumps from a traditional bank to a neobank is the lack of branches. About 83% of U.S. households spoke to a bank teller or other staff at a branch within a year, according to a 2019 FDIC survey. The pandemic accelerated a trend toward more people using digital banking, but a branch can give a personal touch when a complicated issue arises.

Tip: Check Twitter as another place where companies may respond to customers.

4. How would this neobank improve your banking?

As tech companies, neobanks want to provide a better experience for an existing product — bank accounts, in this case. Some neobanks may have a central mission that appeals to a specific community, such as Black Americans or people with disabilities. And most neobanks build out features traditional banks don’t normally have.

"[The] fintech space with its ability to be more innovative and nimble has found some niches in the types of consumer needs” that bigger institutions don’t address, says Marisa Walster, vice president of financial services solutions at the Financial Health Network.

Neobanks such as Chime and Varo have up to two-day early direct deposit, which can ease worries about cash flow for some people. And many don’t charge overdraft fees if balances go negative. Big banks have begun dropping such fees, and at least one started offering early direct deposit, years after neobanks had them.

But neobanks usually don’t offer all the types of loans or accounts a bank does, and the companies may change over time. Fees can get added, and some neobanks even close. For example, the German-based neobank N26 shut down its U.S. operations after two years.

Tip: Consider general pros and cons of neobanks compared with traditional banks. Learn more about how to choose where to bank.

5. What do customers say about the neobank?

Look for patterns about the good and the bad in user reviews. Check the average ratings of the mobile apps in the iOS or Android store as well as various review websites. Are there delays to get a hold of someone? Does the app have glitches? Take in recent reviews as helpful data points within reason since you don’t know how common some scenarios might be.

“Research into complaints to see if other consumers have had … problems and how those were resolved,” says Marisabel Torres, director of California policy at the Center for Responsible Lending. A helpful resource might be the Consumer Financial Protection Bureau’s complaint database for the most popular neobanks or parent companies.

Tip: Be on the lookout for how a neobank resolves fraud claims. Having easy sign-up processes can result in easier identity theft attempts, according to a 2019 report by the National Consumer Law Center. And ultimately, know what to do if a neobank closes your account. Neobanks have promise in making digital banking easier, but they can’t offer everything.

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."

"Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date."

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