Varo Bank review: Fee-free banking and top-tier APY, but is it enough?

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Varo Bank is an online-only bank that offers a high-yield savings account (up to 5.00% APY) and a checking account with cash back rewards. Both accounts have no monthly fees or minimum balance requirements, making them accessible to a wide range of customers.

While Varo provides innovative features like early direct deposit, automated savings tools, and a credit-builder card to help you manage and grow your money. 

While Varo may not be the perfect fit for those who prefer traditional banking experiences, it’s a solid option for someone looking for a more inclusive digital bank.

About Varo Bank 

Varo Bank is a digital bank founded in 2015 with a mission to create a more inclusive and affordable banking experience. 

In 2020, Varo made history by becoming the first fintech company to receive a national bank charter from the Office of the Comptroller of the Currency (OCC), allowing it to offer a full suite of banking services independently.

While Varo Bank's online-only structure and limited product range may not suit everyone, its combination of high yields, minimal fees, and innovative features makes it a good option for digitally savvy users. 

Here are some key things to know about the online bank: 

• Fee-free philosophy: Varo is committed to eliminating common banking fees, helping customers maximize their hard-earned dollars. 
• High-yield savings: Varo offers a competitive APY of up to 5.00% on savings balances up to $5,000.
• Innovative features: The bank provides automated savings tools, early direct deposit, and a credit-builder card to help customers achieve their financial goals.
• Digital platform: Varo is a digital bank that offers a user-friendly mobile app and online banking experience but no physical branches.
• Accessible banking: Varo has no minimum deposit or balance requirements, aiming to make banking accessible to many customers.

While Varo Bank's online-only structure and limited product range may not suit everyone, its combination of high yields, minimal fees, and innovative features makes it a good option for digitally savvy users. 

Varo Bank accounts 

Varo Bank offers two primary account types: a checking account and a savings account. Both are designed to help you manage and grow your money effectively while minimizing fees. Let's take a detailed look at each account and its key features.

Varo Bank checking account

With Varo's checking account, you can enjoy the convenience of online banking without the usual fees associated with traditional banks. There are no monthly maintenance fees, no minimum balance requirements, and no fees for ATM withdrawals at over 40,000 in-network ATMs nationwide.

One of the most attractive features of this account is the cash back rewards program. You can earn up to 6% cash back on select purchases, maximizing your spending power. This is a rare perk among checking accounts. 

Another notable benefit is early direct deposit. If you set up a direct deposit with your employer, you can access your paycheck up to two days sooner. 

Other convenient features include free transfers with Zelle directly from the mobile app and fee-free instant cash transfers to anyone. You can also deposit cash at Green Dot locations, although this is subject to a merchant fee and daily and monthly limits.

While the Varo checking account excels in many areas, there are a few drawbacks. The account does not earn interest, so you won't grow your money by keeping funds in this account. Additionally, Varo does not offer wire transfers, which may be an issue if you need to send or receive money internationally.

Varo Bank savings account 

In addition to its checking account, Varo offers a high-yield savings account to help you grow your money faster. You can earn up to 5.00% APY on balances up to $5,000, one of the highest rates on the market. For balances over $5,000, you'll still earn a solid 3.00% APY.

Like the checking account, the savings account has no monthly fees or minimum balance requirement to earn interest. This makes it easy to start saving, even if you don't have a large initial deposit.

To help you build your savings faster, Varo offers two automated savings tools.

The "Save Your Change" feature rounds up each purchase made with your Varo debit card to the nearest dollar and transfers the difference to your savings account.  The "Save Your Pay" feature allows you to automatically direct a portion of each paycheck into your savings. 

One potential downside of the Varo savings account is that the maximum APY only applies to balances up to $5,000. If you have a larger savings balance, you may earn a higher overall return with a bank offering a high APY on all balance tiers.

It's also worth noting that you cannot open a Varo savings account without opening a Varo checking account. While this may not be an issue for those looking to use Varo as their primary bank, it could be a drawback for those who only want a high-yield savings option.

Other services Varo Bank offers 

In addition to its core checking and savings accounts, Varo Bank offers several unique services designed to help customers build credit and manage their cash flow. These include the Varo Believe Credit-Builder Card, cash advances, and lines of credit.

Varo Believe Credit-Builder Card

The Varo Believe Credit-Builder Card is a secured card designed to help customers establish or improve their credit history. Unlike traditional cards, it does not require a credit check, minimum credit score, or credit history to qualify.

The balance in your Spend account determines your credit limit. Varo reports your payment activity to the major credit bureaus, which can help you build a positive credit history over time.

To be eligible for the Varo Believe Card, you must have an active Varo Bank Account with at least $200 in deposits in the past 31 days. 

Cash advances and lines of credit 

For customers who need short-term borrowing options, Varo offers interest-free cash advances and lines of credit. These services can help cover unexpected expenses or bridge cash flow gaps between paychecks.

Varo's cash advance service allows you to borrow between $20 and $250 (or up to $500 for established customers) with no interest charges. The amount you can borrow depends on your account history and direct deposit activity.

Varo offers lines of credit ranging from $600 to $2,000 for larger borrowing needs. Like the cash advance service, your credit limit is based on your account history and direct deposit activity.

While these services can be helpful in a pinch, it's important to remember that they are still forms of debt. Borrowing responsibly and repaying advances on time can help you avoid falling into a cycle of debt.

Varo Bank fees

One of Varo Bank's key selling points is its commitment to minimizing fees. When you open a Varo checking or savings account, you won't pay any of the following fees:

• Monthly maintenance fees
• Minimum balance fees
• Overdraft fees
• Non-sufficient funds (NSF) fees
• ATM fees (for in-network ATMs)

However, there are a few situations where you may encounter fees with Varo:

• If you use an ATM outside of Varo's network, you'll pay a $3.50 fee per transaction.
• While you can deposit cash at Green Dot locations, these transactions are subject to a fee of up to $5.95 per deposit.
• If you withdraw cash from your Varo account at a bank teller, you'll pay a $2.50 fee per transaction.
• If you use Varo's cash advance service, you'll pay a fee ranging from $1.60 to $40, depending on the amount borrowed.

While these fees can add up, they are generally avoidable with some planning. You can minimize your exposure to these charges by using in-network ATMs, setting up direct deposit, and managing your cash flow.

Varo Bank banking experience 

Varo Bank’s online and mobile platforms are designed to make managing your money as easy and intuitive as possible. 

Online and mobile banking experience 

Varo's online banking platform allows you to manage your accounts, view transactions, pay bills, and transfer money from any web browser. The interface is clean, modern, and easy to navigate.

Varo offers a feature-rich mobile app for both Android and iOS devices for on-the-go banking. The app allows you to:

• Check account balances and transaction history
• Deposit checks remotely
• Send and receive money with Zelle
• Set up bill payments and transfers
• Manage your Varo Believe Card and borrowing services

The app also includes budgeting tools and real-time notifications to help you manage your finances. Customers consistently praise the app's user-friendly design and reliability, which explains the high mobile app ratings. Varo currently has a 4.9-star rating on the App Store and a 4.7-star rating on Google Play — much higher than most other banks. 

While Varo doesn't have physical branches, the bank offers access to over 40,000 fee-free ATMs nationwide through partnerships with major ATM networks. This makes it easy to withdraw cash when you need it without incurring fees.

You can also get cash back at the point of sale when making purchases with your Varo Visa debit card. This can be a convenient way to get cash while avoiding ATM fees.

Customer service 

As an online bank, Varo's customer service is primarily provided through digital channels and phone support. While the bank offers several ways to get help, customer experiences with support have been mixed.

If you need assistance, you can reach Varo's customer support team by phone Monday through Friday from 8 a.m. to 4:30 p.m. MT. Phone support is unavailable on weekends, but you can use the in-app chat feature during the same hours.

Some customers have reported slow response times, difficulty reaching a live representative, unresolved disputes, and account issues. Varo's ratings on platforms like Trustpilot and Reddit reflect these concerns.

It’s worth noting that Varo maintains an A- rating with the BBB and has generally positive reviews for its mobile app. This suggests that while there is room for improvement, many customers are still satisfied with their banking experience.

Account security 

All Varo accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor per account category. This means your money is protected in the unlikely event of a bank failure.

To protect your account from unauthorized access, Varo uses two-factor authentication when you log in. This adds an extra layer of security by requiring you to enter a unique code sent to your phone or email in addition to your password.

How Varo Bank stacks up

It’s helpful to compare Varo’s offerings to those of other popular online banks. Here’s how Varo compares against two major competitors: Chime and Current.

Varo Bank vs. Chime

Chime is another well-known online financial institution that shares many similarities with Varo. Both banks offer fee-free checking and savings accounts, early direct deposit, and a credit-building card.

One key difference is in the interest rates offered on savings accounts. While Varo offers a higher APY (up to 5.00%) on balances up to $5,000, Chime's savings account earns a flat 2.00% APY on all balances. 

In terms of additional features, Varo offers cash advances and lines of credit, which Chime does not. However, Chime does offer a unique "SpotMe" service, which allows eligible customers to overdraw their account by up to $200 without fees.

Varo Bank vs. Current Bank

Current is a newer player in the online banking space. It offers a mobile-first banking experience, focusing on budgeting and savings tools.

Current offers a high-yield savings account option, with an APY of up to 4.00%, slightly lower than Varo’s highest APY. However, if you keep a large balance, Chime may be a better choice, as any balance over $5,000 only earns 3.00% with Varo. 

One unique feature of Current is its teen banking option, which allows parents to open and manage accounts for their teenage children. Varo does not currently offer a similar service.
Both banks offer early direct deposit, fee-free ATM access, and a credit builder card. 

Is Varo Bank right for you?

When deciding whether Varo Bank is the right choice, it's important to consider your financial goals and banking habits. Varo's unique combination of features and services may be a perfect fit for some, but not all. 

Varo Bank may be right for you if:

Varo's savings account offers one of the highest APYs available, especially for balances up to $5,000. Varo could be a great choice if you're looking to maximize your savings growth.

Varo's commitment to minimizing fees can save you significant money over time, especially if you've been frustrated by monthly maintenance fees, overdraft fees, and ATM fees at other banks.

Because Varo is an online bank, it’s important to be comfortable managing your money primarily through online and mobile platforms — that way, you can take advantage of Varo's user-friendly apps and online banking tools. 

Varo Bank may not be right for you if:

As an online bank, Varo doesn't have physical branches. A traditional bank may be a better choice if you value face-to-face interactions or need to handle complex transactions in person.

What’s more, while Varo offers a solid set of core banking products, it doesn't provide more specialized services like mortgages, auto loans, or investment accounts. You may need to look elsewhere if you're looking for a one-stop shop for all your financial needs.

How we rated this bank

Every bank review we publish has undergone a rigorous editorial process to ensure accuracy and objectivity. Learn more about our methodology here. 

Here are some of the factors that influenced this bank’s overall score: 

The bottom line

Varo Bank strives to level the playing field in the banking industry, focusing on financial inclusion. Its banking solutions are affordable, flexible, and loaded with perks you won’t find at most traditional banks. The online banking platform and mobile app are user-friendly and make managing your finances easy.

That said, if you’re looking for a bank that offers more than basic checking and savings accounts, you may want to consider other options. You won’t find home equity products, auto loans, personal loans, or mortgages here. And there are no money market accounts, CDs, or other investment vehicles if you want to earn even more on your money. 

Editorial disclosure: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.