Varo Bank Review: The FinTech With a National Bank Charter
Last year, Varo Money made history by becoming the first FinTech firm to be awarded a national bank charter — resulting in the new name Varo Bank. Although I hadn’t previously used Varo Money, they always struck me as an intriguing service that put its customers first. So, is that same spirit still present in Varo Bank?
Let’s take a look at what Varo Bank has to offer, including the pros and cons of their savings and checking accounts.
What is Varo Bank and What Does it Offer?
Opening Your Account
To get started with Varo Bank, you’ll need to provide some personal information. This includes your name, address, Social Security number, and more. You’ll also need to verify your identity using a form of ID.
Since Varo Bank is indeed a bank, your deposits with them are FDIC insured up to $250,000 per depositor. I should also note that Varo has no monthly fees nor any minimum balance requirements.
For the purposes of this review, we’ll be looking at both of Varo’s main banking accounts: their Savings Accounts and their checking account, which they just call Bank Account.
By default, funds in your Varo Savings account will currently earn 1.20% (as of July 2022). That’s pretty high by today’s standards and far better than most big banks. However, there is the opportunity for customers to earn a much more impressive 5% APY instead.
In order to earn 5% APY for one month, you must meet all of the following requirements:
- You must receive at least $1,000 in qualifying direct deposits
- You must make at least five qualifying purchases with your Varo debit card
- You must keep your checking and savings account balances in positive territory (equal to $0 or above, not negative)
- Not exceed a daily savings balance of $5,000 for the month
Yes, you read that last one correctly — you must keep your savings balance below $5,000 in order to earn the 5% APY. Furthermore, if you go above that threshold at any point during the month and it stays that way past “close of business” (6:00 pm MT/5:00 pm MT, except on the last business day of the month, when it is 4:25 pm MT/3:25 pm MT), you’ll fall down to the normal APY. To me, this is kind of odd. I understand the need to put a balance limit on the higher APY, but I’d expect that the rate would only apply to the first $5k, not punish you by diminishing your overall rate.
Setting that strange bit aside, the requirements for earning the 5% APY are pretty reasonable. While I have yet to qualify myself, I could see it being fairly easy for others who plan on making Varo their main account. Therefore, I think this opportunity is a win overall.
We’re big fans of Varo Bank but it gets even better. For a limited time you can get a $30 bonus if you open a new account with this Dyer News link.
Save Your Change
If you’re looking to boost your savings as painlessly as possible, Varo offers two automated options. The first of these is called Save Your Change. With this feature enabled, Varo will effectively round up your debit card purchases to the nearest dollar and deposit the change into your savings accounts.
This Save Your Change feature is obviously similar to the main feature of the app Acorns (although they weren’t exactly the first to employ it either). Since then, several other apps and accounts have integrated similar functionality — and that’s for a good reason: it works! In my view, the round-ups structure is an easy way to start saving and, thus, I’m glad to see Varo offers this feature.
Save Your Pay
The other half of Varo’s Automatic Savings duo is Save Your Pay. This option allows you to set aside a certain percentage of your deposits. Actually, when you tap on this feature for more details, you’ll notice that this automation only applies to each direct deposit.
With that, I’d like to see this feature expanded so that it can apply to all incoming transfers. However, if that is something you are also looking for, then the third-party app Astra may be able to help. In any case, this simple feature is another easy-to-use solution that could definitely come in handy for someone using Varo as their primary account.
Earlier this year, Varo expanded its Perks program to include a cashback shopping portal. Now, when you select to Perks tab, you’ll see a number of in-store and online offers. For example, as I write this, there’s a deal where you can earn 4.4% cashback at Little Caesars by using your Varo debit card. In other cases, though, you may need to use the Shop Now link and pay with your card in order to get the cashback. Additionally, the platform notes it could take up to two weeks before your rewards arrive in your account.
Scrolling through Perks, there are a few decent offers — but I suspect most of them are also available elsewhere. Because of this, if you do see an online deal you’re considering, try checking Cashback Monitor (a site just reviewed) to see if you can find a better offer elsewhere. Still, this is a nice addition to Varo that could be useful for some customers.
One more thing I wanted to mention about Varo’s savings account is it is currently one of two banks participating in the re-piloting of Long Game. As you may recall, Long Game was an app that encouraged users to save by rewarding them with coins that could then be used to play mini-games and win real cash (and crypto) prizes. While that original app died, it’s been reborn with two partners: NBKC and Varo. In other words, those with Varo Bank accounts can sign-up for the new Long Game and link their account to get started. To me, this is a pretty great perk — but you can read more about it in my updated Long Game review.
Checking (Bank Account)
Even though Varo is now a full-fledged bank, it still doesn’t operate its own branches or have its own ATMs. Because of this, like many online accounts, it offers access to fee-free machines via an ATM network. In this case, Varo partners with the Allpoint network, giving account holders access to more than 55,000 free ATMs. You can also find these machines easily using the “Find ATM” button in the app.
Mobile check deposit
For those like me who still occasionally need to deposit checks, I’m happy to report that Varo Bank does include a mobile check deposit feature in its app. And, unlike some other accounts I’ve reviewed lately, there doesn’t seem to be any need to “unlock” this function. Instead, you can simply select the account you want to make the deposit to, capture images of your paper check, submit them, and the funds arrive in your account within a few business days. I don’t suspect this is a feature most customers will use terribly often, but it’s certainly nice to know it’s there.
When my Varo Bank debit card was delivered, I noticed that the cardstock also included a voided check complete with the account and routing numbers. If you’re among those wondering “why a voided check?” the answer is that the form is intended to be used to set up direct deposit. As someone whose former employer regularly required a voided check in addition to whatever form the institution gave employees, I have to say this is a smart inclusion on Varo’s part.
Like some other online banking accounts have begun doing, Varo also allows customers to access their paycheck up to two days early (although the availability of this feature will depend on your employer’s payroll company). Other than that, I don’t really have a lot to say about direct deposit with Varo aside from what I’ve already noted regarding its role in earning the higher APY and utilizing automated savings options. Hopefully, if you do plan on using your account for direct deposit, the voided check provided may just come in handy.
Another option for moving money into your Varo Bank account is to deposit cash. Again, since Varo doesn’t have any physical branches, depositing cash will mean paying a visit to a participating location — including select CVSs, Rite Aids, 7-Elevens, Walgreens, and Wal-Marts to name a few. This service is in partnership with the Green Dot Network.
One downside is that there may be a fee for adding cash to your Varo card, with the bank warning that merchants may charge up to $5.95 for the transaction. Also, you can only deposit a maximum of $1,000 in cash per day and up to $5,000 in cash per month. Still, despite the fees and limits, this option could prove useful in a jam.
Finally, one relatively new feature is Varo Advance. Presented as an alternative to payday lending, this option allows customers to borrow up to $100. However, there are some stipulations and requirements for customers.
First, in order to qualify for Varo Advance, your account must be at least 30 days old and be in good standing. Additionally, you’ll need to have received at least $1,000 in direct deposits in the last 31 days. Assuming you meet that criteria, you’ll be able to select how much you need to borrow and set a date for when the loan will be automatically paid back. Notably, a fee of $5 or less per use may apply. It should also be noted that using Varo Advance won’t impact your credit score in any way.
Features like Varo Advance are ones you hope to not have to use. Of course, if needed, this option could easily be better than some pricier alternatives. On that note, I do think I prefer this pricing model to something like FloatMe, which charges a monthly fee instead.
Final Thoughts on Varo Bank
For those who enjoy the benefits of FinTech but prefer to deal directly with a licensed bank, Varo is now a great option. As an FDIC-insured bank, there’s definitely an enhanced peace of mind that comes from dealing with them. Plus, they’ve still retained some perks — such as the ability to earn up to 5% APY — even though they are a “real bank” now. I also give them props for their sleek and easy-to-navigate mobile app, as well as their continued updates to their products.
Since adding “Bank” to its name, Varo has continued to roll out new features and options while expanding its product lineup. In other words, they’re staying true to what their vision was when they chose to pursue the banking charter route several years ago. Personally, I think their efforts have paid off as the new Varo Bank has a lot to like now and even more to look forward to. Therefore, if you’re looking for a truly useable online bank, I think Varo is a solid choice.
Yes. In 2020, Varo was granted a national banking charter and accounts are fully FDIC insured.
Varo Bank is a digital-first bank that has been awarded a national charter. The institution offers checking, savings, and credit products.
Varo Bank was founded in San Francisco and has Utah-based consumer service. However, it is a digital bank without physical branch locations at this time.
Yes. As of 2022, Varo Bank customers can now opt-in to send and receive money through Zelle using their Varo accounts.
Varo Bank does not charge any monthly fees for its core checking or savings accounts.
Also published on Medium.