Banking services have different functionalities all around the world. Keeping your everyday cash requires a bank account too. As the banking business requires to charge a fee on an everyday transaction or even on minimum balance, it is time to explore other banking options to save money.
On that front, there are two types of banking services that might help you in this regard. One is the Chime Bank, and the other is Credit Union. The latter is very prominent as it has been functional for a long time, while the former is relatively new in this context of business.
Key Takeaways
- Chime Bank is an online-only bank that offers fee-free banking services, including checking and savings accounts. At the same time, Credit Unions are non-profit financial institutions that provide banking services to members who share a common bond, such as employment or location.
- Chime Bank offers higher interest rates and more flexible banking options than Credit Unions, which have stricter membership requirements and may charge higher fees.
- Chime Bank is FDIC-insured, while Credit Unions are insured by the National Credit Union Administration (NCUA), and both offer mobile banking and other digital services for added convenience.
Chime Bank vs Credit Union
The difference Between Chime Bank and Credit Union is the criteria to join them. Chime Bank is open to all and any citizen of 50 states of the United States of America, while Credit Union is open to the cooperative society of an organization. The size of credit unions ranges from small to big, while Chime Bank is just a single entity, and a Financial Technology Company owns that.
Chime Bank is a banking services entity developed and operated by Fintech in the US. Chime Bank operates over the mobile application and offers zero charges for opening accounts and transactions.
You need not have any minimum balance to open an account too. Chime Bank is renowned for its accelerated direct deposit that can reach your account at least 48 hours early compared to other banks.
Credit Union is a financial cooperative that offers banking services to its members. It has fewer features than traditional banks but has access to a wide range of ATMs worldwide.
Credit Unions are not publicly traded hence, higher interest rates. The best news is the member of the credit union need not pay corporate tax for his earnings.
Comparison Table
| Parameters of Comparison | Chime Bank | Credit Union |
|---|---|---|
| Operations | Chime Bank is operated by Bankcorp or Stride Bank, US. | Credit Union is operated by its members. |
| Interest Rates on Savings | You can earn interest on every single penny you save in the account. | Interest rates are comparatively high than the traditional banks but must maintain a minimum balance. |
| Minimum Balance | No requirement as such | You must have a minimum balance in the account. |
| Physical Branch | No Physical Bank branch | Credit Unions have physical branches. |
| Overdraw facility | Available | Not Available |
What is Chime Bank?
Chime is a banking service offered by a Fintech firm. The banking services of Chime Bank are provided by Bankcorp Bank or Stride Bank. As it is said, banking services it does not have many complicated account options as traditional banks do. It does not have checking or savings account opening criteria as well.
The products offered by Chime Bank are
- Spending Account
- Savings Account
The best part about these accounts is that you don’t need an opening balance or qualification criteria to open an account. You can open the account with the help of them. And yes, mobile application and online banking is the only mode you can do banking with Chime.
Chime Bank has unique offers, unlike the banks. It has an overdraw facility if you regularly receive funds in your spending account. The bank can regulate the overdrawn amount can also reach up to $200. At the same time, a few features help you save money too.
The Savings account is automatically created, and you can save money in this account. As such, there is no fee as a monthly fee, nor you need any minimum balance to maintain. Save as you spend is one of the saving modes.
As you spend on purchasing online, and the amount comes up to $20.70, the app rounds it off to $21, and the $0.30 is fed to the saving account. Save as you get paid is another way to save your money.
If you get paid $500 or more, 10% of the funds are redirected to the savings account, and you can save it alternatively. Chime Bank offers higher APY and a secured credit card service.
What is Credit Union?
Credit Union is also a type of banking service provider but is operated by a cooperative union. Traditionally, the credit union was maintained and developed by people of the same industry or a company or the same locality.
It indeed provides traditional banking services with higher interest towards the deposit. Credit Unions were formed by bigger corporations and organisations for the benefit of the employees.
The participants involved in the credit union, that is, the deposit holders, are the ones who maintain and operate the credit union. Credit Union gives tax-exempt earnings and is thus considered worthy by people.
These days credit union has become public too. At the same time, you can become a member only by opening an account. Of course, opening an account requires a minimum balance and a small amount is also charged on transactions.
Credit unions are formed to invite deposits for higher interest rates and offer loans to employees with lower interest rates. There are charges that the credit unions charge and the business shall run smoothly.
Credit Unions have very few physical bank locations. And a few lower-budget credit unions do not have them too. This might be seen as a drawback. The two main advantages of being a member of a Credit Union is
- Corporate Tax is exempted from the earned money.
- Earnings of every quarter are an increased and thus higher percentage of interest in savings.
Main Differences Between Chime Bank and Credit Union
- The main difference between Chime Bank and Credit Union is the operational aspects. A financial technology company operates the Chime Bank, and any citizen of the US can join as an account holder, while Credit Union is a cooperative developed by the corporations or a group of people and maintained by the members.
- Chime Bank has an excellent online presence, and the mobile application is the mode through which one can transact. However, Credit Unions have physical branches and also possess few online banking facilities.
- Chime Bank does not require any minimum balance for opening an account, while Credit Union requires the member to have a minimum balance.
- Chime Bank offers secured credit card facilities, and Credit Union offers low-interest loans for its members.
- Chime Bank helps customers with overdraw facilities, and Credit Unions do not offer such services.
References
- https://www.sciencedirect.com/science/article/abs/pii/0378426693900318
- https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1468-0416.2011.00166.x
Last Updated : 06 July, 2023
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
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