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Varo Bank Review
Varo is good for customers who like online banking, but customers who prefer in-person banking might want to bank elsewhere.
Founded in 2015, Varo Bank is a popular mobile-only bank. Bancorp Bank provides banking services and technological features for Varo, and in 2016 it received over $27 million in financial backing from Warburg Pincus. Deemed an “intelligent” mobile bank, Varo’s products include checking and savings accounts, debit cards and various lending products. Varo offers a digital financial advisor that’s available 24 hours a day. It can help with budgeting goals and spending analysis, and customers can download the mobile banking app through iOS and Android devices.
Varo Bank at a glance
|Bank||Min Savings Deposit||Max Savings APY||1-Year CD Rate||J.D. Power Survey Score||Key Benefit|
|Varo Bank||$0||3.00%*||Not offered||Not ranked||High APYs and no monthly fees|
What we like about it
The benefits of banking with Varo Bank include no overdraft fees, no monthly maintenance fees and no minimum deposits on accounts. Customers can withdraw cash at 55,000+ Allpoint® ATMs and get up to $100 in the app once they qualify for Varo Advance. See requirements here. Varo Bank deposits are FDIC-insured for up to $250,000.
Varo Bank gives customers convenient access to early direct deposit by up to two days.** Automated savings tools help customers reach their savings goals faster, and Varo’s savings account APY is higher than most other banks. This bank uses heightened encryption to protect customer accounts and offers simplified banking products that make it easy to bank online securely.* Annual Percentage Yield (APY) is accurate as of March 23, 2021. All Varo Savings Accounts earn 0.20% APY beginning on that date. APY is variable and is subject to change. No minimum balance required to open an account. Balance in Savings must be at least $0.01 to earn interest. To earn 3.00% APY, the Varo Savings Account must meet these requirements: Account Holder must 1) make at least five qualifying Varo Visa® Debit Card purchases and must 2) receive total qualifying direct deposits of $1,000 or more to a Varo Bank Account or Varo Savings Account in the same qualifying period. In addition, the daily balance in the Varo Savings Account must not exceed $5,000. If the daily Savings Account balance is above $5,000, or both of the above conditions are not met, you will earn 0.20% APY on the entire Savings Account balance.
**Early access to direct deposit funds depends on timing of the payer’s submission of deposits. We generally post such deposits on the day they are received which may be up to 2 days earlier than the payer’s scheduled payment date.
Things to consider
A concern some reviewers have is that Varo has no physical branches. To deposit cash, customers need to use a third-party service that charges fees for each transfer. Additionally, customers may not like the spending caps and ATM limits Varo sets up if bill payments — for example, a mortgage payment — exceed $2,500 daily for purchases or $1,000 daily for cash withdrawals.
Varo bank accounts
Varo offers online checking accounts called a “Varo Bank Account”, but no paper checks. However, accounts include a debit card, and transactions are conveniently displayed through push notification alerts. Customers can use their account to pay bills and transfer money, as well as get cash fee-free at 55,000 AllPoint® ATMs. Account holders aren’t responsible for unauthorized purchases if they report them immediately.**You must notify Varo Bank immediately of any unauthorized use. For specific restrictions, limitations and other details, please contact Varo.
Varo savings accounts
Savings accounts with Varo Bank are similar to traditional bank savings accounts. Account holders can transfer money from their checking accounts, there are no minimum deposits, and customers can benefit from higher yields. The annual percentage yield, or APY, at Varo Bank is higher than what’s offered by most brick-and-mortar banks.
Customers can benefit from higher APYs if they meet a number of conditions. They must maintain a balance of $5,000 or lower per month, set up a direct deposit that’s over $1,000 per qualifying period*, and use their debit card at least five times per qualifying period. Additional requirements apply. Other ways to save include rounding up transactions to the nearest dollar with Save your Change, and using Save Your Pay.*The qualifying period begins the first calendar day of the month and ends at close of business on the last business day of the month.
Varo money market accounts
Varo Bank doesn’t offer money market accounts for its customers. Customers looking for a money market account online might want to check out Ally Bank. With Ally, customers can benefit from a competitive APY that’s higher than traditional banks but lower than Ally’s savings accounts.
Another benefit is that there are no minimum deposits for Ally’s money market accounts. Customers can make unlimited withdrawals and have unlimited deposits. However, they are limited to six free transactions monthly. After six transactions, a fee is assessed. That’s due in part to the federal regulations for online banks.
Varo Bank currently doesn’t offer certificates of deposit, also known as CDs. An option for a bank that offers CDs is U.S. Bank. With U.S. Bank, customers can benefit from higher interest rates and a fixed rate of return. The minimum deposit for opening a CD is $1,000, and US Bank CDs are backed by FDIC insurance.
Customers can set up different types of CD accounts with U.S. Bank. Options include the Trade Up CD and the Step Up CD, and a benefit of using US Bank when opening a CD account is that customers can open their CD online or they can visit a physical U.S. Bank branch.
Varo IRA accounts
Varo Bank does not offer IRA accounts at the moment. However, customers interested in IRA alternatives might want to explore IRA options with Wells Fargo. Customers can transfer their 401(k) into a traditional or Roth IRA account. Minimum deposits are $100, and there are no monthly fees.
WellsTrade IRAs have no opening deposit minimum and the $30 fee can be waived if certain conditions are met. Similarly, the Full Service Brokerage IRA account requires no minimum deposit and the $125 fee is avoidable.
Varo credit cards
Varo has introduced the Varo Believe Program, a new way to build credit* with no upfront deposit. The program offers a credit card that’s linked to the Varo Bank Account to help customers avoid runaway debt. To start qualifying, customers will need a minimum of two direct deposits totaling $1,000 or more in the past 90 days. Additional qualifications apply.*The Varo Believe Program is designed to help you build your credit; however, a variety of factors impact your credit including payment history, utilization, derogatory marks, account age, total number of accounts, and inquiries–not all factors are equally weighted. Building your credit may take time and is a process, but the Varo Believe Program may be able to help.