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SmartAsset: SoFi vs. Chime

SoFi and Chime are two popular financial technology (fintech) companies. Both offer online banks, with depository accounts and some lending products, and neither has a brick and mortar presence. This means that customers of SoFi and Chime bank entirely through their apps and websites. However, they operate in importantly different ways. If you’re looking for an online bank, here’s how you can evaluate these two products.

A financial advisor could help you create a financial plan for your banking needs and goals.

What Are SoFi and Chime?

SoFi, short for Social Finance, started out as a lending bank that exclusively offered student loan refinancing. This remains one of the company’s core identities. However, in the years since, it has grown into a full-fledged online bank that offers depository accounts and lending products. In addition to this banking section, previously called SoFi Money, SoFi offers products such as insurance, mortgages and loan refinancing.

Chime offers a more focused product than SoFi. This company operates entirely as an online bank with some personal lending products alongside its depository accounts. The core pitch for Chime is its simplicity. It has a handful of products intended to cover a consumer’s banking needs, ideally offering you an easy to use, comprehensive bank.

In this article we will compare SoFi and Chime as banking products. So, for example, we won’t dive into SoFi’s insurance offerings or student lending products because Chime isn’t in those businesses. This speaks to the overall profile of these two companies though. If you’re looking for a more complex online bank with a wide range of services, SoFi is probably the right choice for you. If you only need standard banking services and appreciate a straightforward product, or if you are new to banking and finance, Chime might be a good fit.

SoFi vs. Chime: Product Offerings

SoFi and Chime both offer a range of standard banking products. Here’s how they line up.

Checking and savings accountsChime offers both a checking account and a savings account. At time of writing the checking account did not offer any interest, while the bank’s high yield savings account offers interest rates up to 1.5%. All users receive a standard debit card for making withdrawals from their checking account and this card works with all major ATMs.

SoFi offers a single joint checking and savings account. This means that you have one account for both making withdrawals and earning interest. At time of writing SoFi offered up to 2% interest for this account depending on certain factors, but only offers 1% interest for users that do not have direct deposit enabled. As with Chime, users receive a standard debit card for spending and withdrawals and it works with all major ATMs.

Credit cards. Chime offers a Visa credit card that is targeted towards users that want to build their credit. It does not check your credit when applying and, like many credit-building cards, requires that you link the card to your bank account. Specifically, you move money from your Chime account to your Credit Builder card account and use that money to pay the credit card’s bill each month, which in turn helps you build credit over time. This can be a good option for users with absent or poor credit histories, letting them build credit over time.

The SoFi credit card is a more traditional cash-back rewards card that uses the MasterCard network. They offer between 1% and 3% cash back depending on your specific account details and, like Chime, offer no fees for their card. Jumping off SoFi’s history as a debt refinancing company, the largest cash back rewards are for users who spend their rewards to pay off other loans. For example, you can get up to 3% cash back if you use that cash as credits against a student loan you refinanced through SoFi.

Mortgages and personal loansChime does not offer any mortgage or individual lending options beyond its credit builder card.

SoFi currently offers mortgages and several forms of personal lending. Its personal loans tend to focus on refinancing existing debt, although the company does some original lending. SoFi’s mortgages are standard home loans with interest rates based on the market at large, although they offer relatively generous down payment terms, claiming to give loans for as little as between 3% and 5% down.

Sofi vs. Chime: App Features

SmartAsset: SoFi vs. Chime

When it comes to their websites, SoFi and Chime can both be a little bit tricky. The companies list their financial products prominently, but it can be difficult to sort through the marketing language to find the actual details about bank accounts, credit cards and the like. This might leave some users confused when they receive interest rates or cash back offers different from the top-line numbers that the companies’ websites promised.

Beyond that, however, each company offers a well-designed and easy to use interface when it comes to actually managing your money. In many ways the apps for both SoFi and Chime are fairly similar to each other and, indeed, they will be fairly intuitive to anyone who has used a banking app before. Your accounts are listed on the front pages of both apps, with balances and amounts due listed prominently. You can click through to see your specific transactions, make changes and otherwise manage your banking all from within these main screens. It is a standard design and one that works quite well.

SoFi vs. Chime: Costs and Usability

When it comes to fees for banking products, SoFi and Chime also largely overlap.

Both companies offer free bank accounts and free credit cards. You don’t pay for any of these products directly and Chime, in particular, emphasizes cost-reductions like waiving most overdraft fees. Each company, instead, has its own monetization model. Chime makes money by merchant and ATM transaction fees when you use your debit and credit cards, while SoFi has a more comprehensive lending and transaction fee business model that largely resembles that of a traditional bank.

SoFi offers better interest rates for banking, with users potentially getting up to 2% on their single account if they have their paychecks direct deposited and 1% on this account if they do not. Chime users receive no interest on checking and up to 1% interest on savings. Similarly, neither company charges fees for their credit cards. SoFi has a credit requirement for their card which offers cash back ranging from 1% to 3% depending on how you use the card. Chime has no credit requirement for their card, allowing customers to use this as a credit-building vehicle although they receive no cash back or rewards points.

Bottom Line

SmartAsset: SoFi vs. Chime

SoFi is a fairly comprehensive online bank with products and a business model that largely resemble a traditional banking institution. More established consumers or those who want more sophisticated products, like mortgages and personal lending, might want to consider this company.

Chime offers a streamlined set of banking products that emphasize simplicity. Newcomers to finance, or those who are having credit issues, might appreciate this company’s products.

Tips for Financial Planning

  • Whether you bank online or in person, finding the right financial advice is critical. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Online banks have become huge in recent years, particularly among customers who realized that they never actually use their bank’s brick and mortar stores anymore. But are they right for you?

Photo credit: ©iStock.com/AsiaVision, ©iStock.com/FG Trade, ©iStock.com/MStudioImages

Eric Reed Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
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