Varo Bank has gained significant attention in the financial world, particularly in the realm of digital banking. As a fully online bank, Varo offers a range of services with minimal fees and a focus on convenience. It is an ideal option for people who want to manage their finances digitally, without the hassle of traditional banking institutions. In this article, we will dive into the essential aspects of Varo Bank, covering its features, benefits, comparison with other digital banks, and its impact on the modern banking experience.
What is Varo Bank?
Varo Bank is a mobile-first, digital-only bank, meaning it operates entirely online without any physical branches. It is one of the few U.S. fintech companies that has achieved full banking status, allowing it to offer services similar to traditional banks. Varo received its official bank charter from the Office of the Comptroller of the Currency (OCC) in 2020, which allowed it to offer more robust services, such as lending and checking accounts, directly without the need for a partner bank.
Key Features of Varo Bank
- No Monthly Fees
One of the standout features of Varo Bank is that it has no monthly maintenance fees for its checking and savings accounts. This is a massive advantage over traditional banks, which often charge monthly fees unless certain conditions are met. - High-Yield Savings Account
Varo’s savings account offers one of the highest annual percentage yields (APYs) in the industry. Currently, it offers an APY of 5.00% for balances up to $5,000 (as of 2025), which is much higher than the average rates offered by traditional banks. - Cash Back Rewards
Varo offers 1% cashback on debit card purchases for customers who meet certain criteria, such as receiving direct deposits into their Varo accounts. This provides an additional incentive for users to choose Varo as their primary banking option. - Early Direct Deposit
Varo allows users to receive their direct deposits up to 2 days early. This feature is particularly valuable for those who rely on their paycheck and want faster access to their funds. - Fee-Free ATM Access
Varo gives its customers access to over 55,000 ATMs nationwide through the Allpoint ATM network. This network allows you to withdraw money without incurring any ATM fees, which is an important feature for people who don’t want to pay extra fees for accessing their funds. - Varo Credit Card
Varo has launched its own Varo Credit Card, which offers cash back on purchases and does not charge interest or fees if the balance is paid in full each month. The card is designed for those who want to build or improve their credit score while avoiding typical credit card fees. - Mobile App
The Varo mobile app is user-friendly and allows customers to manage their accounts, track spending, set savings goals, and transfer money. The app also has budget management tools to help users stay on top of their finances. - No Overdraft Fees
Varo offers no overdraft fees, making it easier for customers to avoid the financial stress of overspending and accumulating debt. However, Varo has a SpotMe feature, which allows eligible customers to overdraft up to a specified limit (based on direct deposit and account activity) without incurring fees. - FDIC Insurance
Varo’s checking and savings accounts are FDIC-insured through its banking partner, The Bancorp Bank, ensuring your funds are protected up to $250,000 per depositor, per account type.
Comparison: Varo Bank vs Traditional Banks
Let’s compare Varo Bank with a traditional bank and other popular digital banks like Chime and SoFi in terms of fees, APY, and features:
| Feature | Varo Bank | Traditional Banks | Chime | SoFi |
|---|---|---|---|---|
| Monthly Fees | No fees | Fees often range from $5 to $25/month | No fees | No fees |
| APY on Savings | 5.00% (up to $5,000) | Typically 0.01% to 0.05% | 1.00% APY | 1.20% APY |
| Cash Back on Debit Purchases | 1% on qualifying purchases | Not typical | 0% cash back | 1% cash back on purchases |
| Fee-Free ATM Access | 55,000 ATMs nationwide | Limited to network ATMs | 24,000 ATMs nationwide | 24,000 ATMs nationwide |
| Early Direct Deposit | Up to 2 days early | Varies by bank, typically 1-2 days | Up to 2 days early | Up to 2 days early |
| Overdraft Protection | SpotMe (limits vary) | Varies by bank, typically fees charged | SpotMe (up to $100) | Overdraft protection available |
| Credit Building | Varo Credit Card, no interest/fees if paid on time | Limited credit-building options | Credit Builder Card available | No credit building card available |
| FDIC Insurance | Yes | Yes | Yes | Yes |
Pros of Using Varo Bank
- No Fees: Varo Bank offers a fee-free banking experience, which is a significant benefit over traditional banks that charge maintenance, overdraft, and ATM fees.
- High-Interest Savings: With a 5% APY on savings (for balances up to $5,000), Varo offers one of the highest rates in the market, making it an attractive option for savers.
- Early Access to Direct Deposits: Being able to access your paycheck up to two days earlier is a major advantage, especially for those who rely on direct deposits for their income.
- Cash Back Rewards: 1% cash back on qualifying debit card purchases is a solid perk, particularly when you’re using your debit card regularly.
- No Overdraft Fees: The SpotMe feature is useful for people who occasionally need to overdraft, and the fact that Varo doesn’t charge overdraft fees is a game-changer for many customers.
- Simplicity: The app is intuitive, making it easy to track finances and manage your account on the go.
Cons of Using Varo Bank
- Limitations on APY: The 5% APY only applies to balances up to $5,000. If you save more than that, your savings will earn a much lower interest rate.
- Limited Physical Customer Service: As an online-only bank, Varo does not have physical branches for in-person customer service. While there is 24/7 customer support available online, some customers may prefer face-to-face interaction.
- Limited Credit-Building Tools: While Varo offers a credit card and some credit-building tools, they are limited compared to other services like SoFi or some traditional banks.
- SpotMe Limitations: Not all customers will qualify for SpotMe, and the limit varies depending on account activity and direct deposits.
How to Get Started with Varo Bank
- Download the Varo App: The Varo mobile app is available on both iOS and Android. Download it from the App Store or Google Play.
- Create an Account: After downloading the app, follow the steps to create your account. You’ll need to provide some personal information, such as your name, address, and social security number.
- Deposit Funds: Link an external bank account or deposit money using Varo’s direct deposit feature to fund your account.
- Start Using Varo: Once your account is set up, you can start using the mobile app to manage your finances, make transfers, earn cashback, and track your savings.
Useful Links
Conclusion
Varo Bank is revolutionizing the way people think about banking by offering an entirely digital, fee-free experience with competitive rates and features. It’s an ideal choice for individuals looking for a simple, straightforward way to manage their money without the added costs of traditional banking. Whether you’re looking for a high-yield savings account, early access to your paycheck, or cashback rewards, Varo provides a robust set of features that cater to today’s mobile-first society.
