As online banking evolves, more virtual banks are turning themselves into all-in-one experiences for their customers. Instead of only opening a bank account, you can also borrow money, build credit, and explore additional opportunities. Varo Bank is a large online bank with over 7 million accounts. The bank has many features and resources, making it one of the top online banks. This Varo Bank review will explore what the online bank offers and some of the key details to consider before getting started.
What is Varo Bank?
Varo Bank is an online bank that offers bank accounts, loans, educational resources, and other components to help you on your financial journey. Varo Bank has high ratings in the App Store and Google Play from many satisfied users. Varo doesn’t have any surprise fees and removes many of the costs associated with checking and savings accounts. The company also has a cash advance available when you need extra cash for an emergency expense.
Is Varo a Real Bank?
Varo is a real bank that has a national bank charter. Other online banks are fintech companies that partner with banks to support FDIC-insured accounts. Since Varo has a national bank charter, the company offers its own FDIC insurance. The money in your Varo accounts is insured with the FDIC for up to $250,000. The company uses advanced technology to keep your information secure from hackers.
How Does Varo Bank Work?
Varo Bank offers many financial services in a single dashboard. While you will have to open an account somewhere else to invest money and take out a personal loan, the online bank has most of what you need. Individuals can access many financial products designed to improve their credit scores and make their financial goals more attainable.
Varo Banking Key Products and Details
Varo offers several products that can help you on the path to financial freedom. These are some of the highlights.
Online Bank Account
Varo lets you create an online bank account that you can access from any device. You can do mobile check deposits by taking a picture of both sides of the check. Online bank accounts have high APYs and no fees. You can even automatically round up every purchase to build your savings. For instance, if you spend $29.46 on a purchase, Varo rounds the purchase to $30 and puts the extra $0.34 into a high-yield savings account. This round up feature can add up over time as you make more purchases with your Varo debit card. You don’t even need a minimum deposit to get started.
High-yield Savings Account
Varo has one of the highest yields in the industry. You can receive 5% APY on the money that you store in your Varo savings account. The 5% APY applies to the first $5,000 in your Varo savings account. Everything above $5,000 ends up with a 3% APY. Both numbers are much higher than the national average, which is 0.42% APY. You also have to set up direct deposits of at least $1,000 per month to qualify.
A high-yield savings account allows you to earn a risk-free return on your money. It’s a great alternative for people who prefer to avoid the stock market’s volatility. Investors who feel bearish for now may want to consider the Varo high-yield savings account to earn a return on their money before becoming more comfortable with re-entering the stock market.
Believe Credit Builder Card
Your credit score is one of the most important financial metrics that impact how much money you can borrow and what interest rate you receive. A good credit score can help you save thousands of dollars over your lifetime, but not everyone has the best credit score.
The Varo Believe Credit Builder Card is a secured credit card that does not require a minimum security deposit and has no interest or annual fees. Some credit card issuers set interest rates above 30% APY for secured credit cards.
You get to choose your own spending limit based on how much you deposit into your card. Varo does not run credit checks during the application process. You don’t even need any credit history to receive a card. Your credit score will improve when you make on-time payments since your activity gets reported to the major credit bureaus.
Qualifying is easy. All you need is a Varo Bank account with a positive balance and no overdue Varo Advance. You will also need at least $500 in qualifying direct deposits over the past 90 days.
Instant Cash Advance
Varo gives out instant cash advances when you need a few hundred dollars to cover an emergency expense. This cash advance starts at $20 and grows over time as you make more direct deposits and pay back any cash advances that you use. The limit is $500; you can reach it quickly with good financial history.
You have to repay your Varo cash advance within 30 days. Varo does not charge interest but does have an 8% fee based on how much you borrow. If you borrow $100, you will have to pay $8 in interest. If you borrow the $500 maximum, you will owe $40 in fees. The instant cash advance is a great way to tap into extra cash, but the fees can accumulate quickly if you become too reliant on this feature.
Banking Features of Varo
Varo has many banking features. These are some of the top perks.
Online and Mobile Banking
You can access your bank account and all of Varo’s features right from the Varo app. Online and mobile banking can save you a lot of time since you don’t have to go to a local bank as often. If you need cash, you can withdraw it from an ATM. Varo has a network of over 40,000 fee-free ATMs. You can look for nearby ATMs on the Varo app so you can save money on ATM fees.
Manage Your Money
Managing money is a critical component of long-term financial wealth. However, many people need to create accounts on several platforms just to have everything they need. Some online banks offer many core services under the same umbrella, and Varo is one of them.
Varo makes it easy to manage your finances across multiple bank accounts and tap into early paydays if you need extra cash. Every Varo bank account is insured by the FDIC. You can also send money via Zelle and get cashback rewards for every purchase you make.
Varo makes it easy to move money from your account. You can get paid in a few minutes through Zelle transfers, a common banking feature that Varo supports. Money transfers with Varo are fast, free, and secure.
Varo supports early direct deposits. You can get paid up to two days early, so you don’t have to resort to payday loans or personal loans. You can then decide if you want to move some of the funds from your Varo checking account to the high-yield Varo savings account.
How will your money grow over time? Many people put their money into high-yield savings accounts and brokerage platforms to earn a higher return on their capital. Varo offers a useful savings calculator that indicates how much your money will grow over time.
The Varo savings calculator compares how your money will grow with Varo, Chime, Bank of America, and Chase. You can decide on the principal amount and how many years the money is compounded for each calculation. Varo’s 5% APY comfortably exceeds Chime’s 2% APY, and the calculations show how those gaps compound over time.
For instance, if you put $3,000 into Varo and receive 5% APY, you will end up with an additional $828.97 over the next five years. Chime comes in a distant second place with $312.19 in interest over the past five years.
These calculations can inspire you to put more money into your savings account based on your long-term goals. A higher principal will lead to higher interest payments, and you will receive 5% APY for the first $5,,000 in your Varo savings account. You can then earn a respectable 3% APY for the rest of the money in your Varo savings account.
Saving money is a core pillar of any successful financial plan. However, many people forget to save their money, which can impede progress toward long-term financial goals. Automated saving and investing can ensure individuals get closer to their savings goals each week like clockwork.
Varo offers two auto-savings tools that can move you closer to your goals. The first feature is Varo round-up. You can round up every purchase to the nearest dollar and invest the difference into your Varo high-yield savings account.
The second savings tool lets you tuck away a percentage of every paycheck. If you want to save 10% of your paycheck, Varo can handle that for you. Varo customers get to set the percentage, and then transfers take place automatically.
Free Debit Card
Varo sends its customers a free debit card that connects to their checking account. The Varo debit card is a useful alternative for people who want to avoid credit card debt. The Varo debit card does not have any hidden fees and is available online. You can use a virtual Varo debit card before a physical copy arrives in the mail. You can put your virtual Varo debit card in your Apple Wallet or Google Wallet.
Varo has a network of over 40,000 fee-free ATMs at convenience stores and locations like Walgreens, CVS, and 7-Eleven. Most people will only have to walk a few blocks to find a fee-free ATM instead of driving for several miles.
You can use security features in the Varo mobile app to instantly lock up your debit card if it gets lost or stolen. Varo will then send you a free replacement. The online bank also uses Visa Zero Liability to protect consumers from unauthorized charges.
Get Cash Back
Varo debit cards and secured credit cards have enticing cashback rewards. You can receive up to 6% cashback when you use your card with select brands. The company teams up with many established brands and gives out cash instead of points. You won’t have to worry about any complex conversions if you want to receive cash rewards.
This cashback rewards program gives Varo’s secured credit cards a significant advantage over most secured cards. Many credit card issuers have high interest rates and zero rewards for their secured credit cards. However, you can get great rewards and pay zero interest on your Varo secured credit card.
What are the Benefits of Banking with Varo?
Varo offers several benefits for consumers. These are some of the top advantages.
- High-yield savings accounts: Earn 5% APY on the money you store in your Varo savings account. That’s much higher than the national average and comfortably exceeds the APYs for top competitors.
- Build credit: The Varo BelieveCredit Builder Card allows you to build credit without worrying about interest and fees. There is no minimum security deposit, and the amount you put in becomes your credit limit. This secured credit card is also eligible for cashback rewards.
- No credit checks: You do not have to worry about a credit check if you take out a cash advance or a Varo Believe Credit Builder Card.
- Free debit card: Receive your Varodebit card in the mail shortly after creating your Varo account. Customers can use the virtual debit card right away and can lock it up at any time. You will even get a free replacement if your card gets lost or stolen.
- Automatically grow your savings: Varo has several tools that make it easier to grow your savings even if you aren’t looking at your account every day.
- Instant cash advance: Borrow up to $500 for an 8% fee. Varo does not charge interest.
- ATM network: Varo has an ATM network that consists of over 40,0,00 fee-free ATMs. Many of these ATMs are located in convenience stores.
What Are The Requirements to Open an Account with Varo?
Varo has general requirements for opening an account that you will find with most banks. You must be a U.S. citizen or permanent resident who is at least 18 years old. You will have to provide a valid ID such as a driver’s license, state ID, or passport. Then, you will have to provide your Social Security Number and your physical mailing address. Varo needs your physical mailing address to verify your identity and send you a copy of your Varo debit card.
Fees and Costs of Banking with Varo
Varo does not have any monthly fees or overdraft fees. Varo declines transactions that would bring your balance before $0 instead of charging an overdraft fee. The virtual bank charges an 8% fee on any cash advance you request through the app. You don’t have to worry about any hidden fees.
How to Sign Up with Varo
Varo can make managing your money easier, building credit, and obtaining great rewards. The online bank makes it straightforward to get started. All you have to do is fill out this brief form. Varo will ask for your email, a U.S. mobile phone number, and a password. After providing this information, you will then have a Varo account. Varo will then ask you to verify your identity and complete the rest of the process so you can use the bank’s products.