How Does Varo Money Work?
- March 7, 2018
- Posted by: Jeff Gitlen
- Category: Banking
Varo Money is trying to reimagine what banking looks like by using technology to help you achieve financial security. Started in 2015 and based in San Francisco, the company offers no-fee banking that helps you improve your financial health.
They combine online banking and financial services with an app that encourages you to save and make important financial moves like squirreling away an emergency fund, improving your credit, and insuring yourself or your family.
What Are the Benefits of Using Varo?
When it comes to using Varo Money, there are several notable benefits. The app has partnered with Bancorp Bank and gives you access to a number of mobile banking products including checking and savings accounts, personal loans, and lines of credit.
They have no monthly fees, no minimum balance fees, no overdraft or foreign transaction fees, and you can use the Allpoint ATM network to access your account. Allpoint has over 55,000 ATMs worldwide.
Varo’s savings account allows you to deposit checks via your mobile phone, or at thousands of participating retailers. They make it easy to transfer money from Square or PayPal, and you can pay your bills by debit or by check.
One of the biggest benefits is how much information the app gives you about your financial life. You can easily see your current balance, but it also allows you to see your upcoming income and bill predictions, and a 30-day view of your cash flow. The app analyzes your finances and makes recommendations to help you improve your financial health. You can set up financial goals through the app and track your spending and stick to your budget.
It also allows you to access your paycheck two days early if you sign up for direct deposit. Do you usually get paid on Fridays? Great – you’ll be able to access your cash by Wednesday!
Their savings account pays a 1.25 percent APY on your deposit, which is higher than most traditional banks.
Have debt or need a loan for some other reason? Varo Money can help you consolidate your credit card debt or borrow money with a personal line of credit so that you can save on interest and repay your debt more quickly. Loans have term lengths that range between two to five years.
The app allows you to see your debt as it gets smaller with each payment and counts down the days until you’re debt-free. Varo’s lines of credit allow you to have $1,000 to $5,000 available when you need to draw on it. Interest rates vary between 13.75 percent and 23.75 percent APR.
Despite not having branch locations, they offer customer service that you can contact via phone or online. Ultimately, Varo combines the best of online banking with a great personal finance app in one place.
What Are the Costs of Using Varo?
When it comes to how much Varo Money will cost you, you’ll be glad to know that it won’t be much! If you just use their banking products, it could be completely no-fee. The only exemption is if you need to use an ATM that isn’t in Allpoint’s network. For that reason, you might want to check to see how many Allpoint ATMs are near you to determine how convenient it would be for you to bank with Varo Money.
There are also costs associated with their lending products. Their lines of credit have fairly low credit limits, and the APR for their lines of credit is relatively high compared to other options online or from other banks. But it is an unsecured line of credit, which can be a bit more expensive. How much you’ll pay in interest on the personal loans will depend on your personal credit and financial situation.
Varo also currently only offer loans in these states: Arizona, Florida, Illinois, Michigan, Missouri, Pennsylvania, Tennessee, Texas, Utah, and Washington.
In addition, there have been complaints that the company has restrictions on how much you can transfer from your account, which could interfere with your banking or financial needs.
The Bottom Line
Varo Money can be a good no-fee option for banking and gives you a great app to help you manage and improve your financial life. Although it offers great banking features combined with a great app, you could just go with another online bank and download another money management app to help you manage your financial life. For that reason, it’s important to make sure that the banking services that Varo Money offers are right for you.