Varo: Banking Reimagined for Today’s Consumer
As one of the first all-digital banks in the U.S. to receive a national bank charter, Varo stands out with its mission to provide simple, affordable, and accessible banking for everyone. With a range of services designed to cater to a broad spectrum of customers, Varo has carved out a niche for itself in the digital banking landscape. Varo is an FDIC member bank itself. This means that Varo Bank, N.A., is directly insured by the FDIC, ensuring that customer deposits are protected up to $250,000 per depositor, per ownership category. You can find more details about their FDIC insurance on their security page.
Products and Services
- Checking Accounts: Varo brings a robust suite of banking services right to your fingertips. It all starts with their Varo Bank Account, a checking account that comes with no monthly fees, no minimum balance requirements, and access to over 55,000 fee-free Allpoint ATMs. It’s a great option for anyone looking to keep their banking costs low.
- High-Yield Savings Account: For savers, their Savings Account is a standout. With a high-yield APY that can reach up to 5.00%, Varo offers one of the most competitive rates in the market. The best part? You can earn this rate without any hoops to jump through—just meet some simple monthly requirements like qualifying direct deposits and maintaining a certain balance.
- Cash Advances: Varo Advance allows customers to borrow small amounts of money quickly, with the flexibility of repaying it on their next payday.
- Varo Believe Credit Card: For those looking to build or rebuild their credit, the Varo Believe Credit Card is a secured card that helps users improve their credit score without the risk of overspending. It’s a refreshing take on credit building, with no annual fees and a unique setup that uses the money you move to your Varo Believe account as your credit limit.
- P2P Money Transfer: Varo offers seamless peer-to-peer money transfers, making it easy to send and receive money between Varo accounts.
- Early Direct Deposit: Customers can receive their paychecks up to two days early, a perk that adds a layer of convenience for those who rely on timely access to their funds.
Target Market
Varo’s target market is pretty broad but focuses heavily on tech-savvy millennials and Gen Z’ers who are comfortable managing their finances through an app. The bank’s user-friendly mobile app and transparent fee structure appeal to younger customers who are often wary of traditional banks’ hidden fees. The bank’s no-fee structure and high-yield savings account also attract budget-conscious individuals looking for a better alternative to traditional banking. Operating entirely online, it is particularly appealing to those who prefer a digital-first approach.
Pros and Cons of Varo
Pros
- No Fees: Say goodbye to monthly maintenance fees, overdraft fees, and foreign transaction fees.
- High-Yield Savings: Earn up to 5.00% APY, one of the highest rates available.
- Credit Building: The Varo Believe Credit Card is an excellent tool for building credit.
- Early Direct Deposit: Get your paycheck up to two days early.
- User-Friendly App: The app is intuitive and easy to navigate, making banking a breeze.
Cons
- Limited Physical Presence: As an all-digital bank, there aren’t any physical branches, which may be a drawback for those who prefer in-person banking.
- ATM Fees: While withdrawals at Allpoint ATMs are fee-free, using out-of-network ATMs can incur fees.
- Limited Account Types: While Varo offers essential banking products, it lacks more advanced options like investment accounts or loans.
- Cash Deposit Limitations: While cash deposits are possible through Green Dot locations, it’s not as straightforward as at traditional banks.
- P2P Transfer Limitations: Instant transfers are limited to Varo accounts. External transfers use the ACH network and can take up to 3 business days to clear.
Reward Programs
Varo offers a unique rewards program called Varo Perks. This program provides cash back for purchases at select retailers, helping users save money while they shop. Additionally, it often runs promotions that incentivize users to set up direct deposits or use specific services, further enhancing the banking experience.
Marketing Niches
In terms of marketing, Varo positions itself as a champion of financial inclusion. The bank’s messaging often emphasizes its commitment to providing fair and transparent banking services to all, regardless of their financial background. This inclusive approach resonates with those who feel underserved by traditional financial institutions.
Final Thoughts on Varo
Varo is a forward-thinking neobank that offers a comprehensive range of financial services, all wrapped in a user-friendly, no-fee package. Its focus on accessibility, transparent pricing, and innovative products like the Varo Believe Card make it an excellent choice for those looking to manage their finances digitally. While the lack of physical branches may be a downside for some, the bank’s robust app and wide-ranging services more than makeup for it, making Varo a compelling option in the crowded neobank market. Reviews on Trustpilot (with a score of 2.0) are mixed, with a majority very happy but some not feeling it was a good fit, so it’s best to perform a thorough investigation to make sure it’s a good fit for you.
