So to ease your confusion, this comparison is between two digital banking options: Chime and Wealthfront.
Both offer free checking accounts that are Federal Deposit Insurance Corporation (FDIC)- insured, a lot of mobile features, and various customer perks such as early direct deposits.
There are plenty of differences between Chime and Wealthfront. Wealthfront offers an extensive lineup of features and services apart from its deposit accounts. As no two banking platforms are identical, here are the differences between the two that will help you choose the best fit for your financial needs.
Key features:
The major difference between the accounts revolves around the financial planning services, line of credit, and investment management accounts.
Both Chime and Wealthfront offer accounts that are FDIC-insured. Wealthfront also offers an investment management account and a portfolio line of credit.
Chime’s available account types
Chime majorly offers two deposit accounts- the spending account and the savings account.
Spending account
Source- Chime
The spending account is a checking account that has no minimum opening deposit or ongoing minimum balance requirements along with no monthly maintenance fees.
This account comes with a chip-enabled, debit card issued by Visa, and it is accepted almost everywhere.
Apart from these features, the account holders carry fee-free access to approximately 38,000 U.S. ATMs through the MoneyPass and Visa Plus Alliance networks.
Chime is also compatible with Apple Pay, Samsung Pay, and Google Pay along with various mobile peer-to-peer transfer apps.
However, Chime charges you $2.50 per out-of-network ATM withdrawal or in-branch withdrawal.
Savings account
Source- Chime
Chime’s savings account works like a basic savings account that offers minimal, variable yield. It offers automated savings tools: ‘Save when you spend’ and ‘Save when you get paid’.
The ‘Save when you spend’ feature automatically rounds the debit card transactions up to the nearest dollar and then the difference is deposited into your savings account.
The other feature lets you transfer up to 10% of your paycheck into your Chime savings account before the rest of the amount transfers to your spending account.
WealthFront’s available account types
Wealthfront offers a diversified lineup of accounts in comparison to Chime. The lineup includes taxable and tax-advantaged investment accounts, an FDIC-insured cash management account, and a low-cost portfolio line of credit.
Cash account
Source- WealthFront
This is a cash management account that is FDIC-insured on balances up to $1 million. It has a minimum deposit requirement of $1 and offers a debit card that is accepted by millions of merchants, mobile check deposits, and variable annual percentage yield (APY).
If your employer qualifies, it also promises a paycheck direct deposit up to two days early.
Other attractive features include free bill pay and mobile transfers, and no overdraft fees.
Investment accounts
Source- WealthFront
Wealthfront offers you three types of investment accounts: taxable, tax-advantaged (IRA), and education savings.
All of these accounts have minimum balance requirements of just $500 and they offer complimentary rebalancing.
These accounts are tailored using exchange-traded funds (ETFs) that meet the account holder’s risk tolerance and long-term investment objectives.
Portfolio line of credit
Source- WealthFront
This is a margin lending product that allows account holders with at least $25,000 in invested assets to borrow up to 30% of their portfolio’s value at a low interest rate with no fixed repayment schedule.
Wealthfront’s portfolio lines of credit can be used for virtually any purpose.
Which option is the best for you?
With enough information about the account types offered by these digital banks, you can determine the best choice for you. You need to consider their respective advantages and drawbacks.
When should you open a Chime account?
Chime is beneficial for you when:
a) You want a simple and basic account: Chime doesn’t come with multiple features due to which it can be used easily and effectively. This lightweight financial product offers users basic spending, saving, and money management tools.
b) You want to issue checks to payees: Even after being an online bank, Chime offers an old-fashioned banking feature that could be useful for some customers: a free bill pay system that offers a paper check option.
When should you open a Wealthfront account?
Wealthfront will fit you better when:
a) You want to borrow against the value of your portfolio: Wealthfront’s portfolio line of credit is a great substitute for a home loan or a line of credit.
Chime doesn’t offer anything similar.
b) You require help in financial planning: Being an online bank, Wealthfront can’t offer you advisors, or any relations with third-party advisors. However, it does offer basic financial planning help, a useful financial calculator app, and in-depth guides for DIYers. On the other hand, Chime offers nothing like this.
Both of the accounts are great when…
a) You feel in-branch banking is a hassle: Neither Chime nor Wealthfront has physical bank branches or any public offices. If you are someone who feels that the traditional banking method is a hassle, then you can use either of the two options. The maximum you will come to setting a foot in a bank branch is when you need to go to the ATM vestibule.
b) You need some extra push to save: Chime already offers two ways to save automatically: round-up-the-change feature and an automatic paycheck savings feature. Similarly, Wealthfront offers an autopilot feature that lets you specify a maximum cash account balance and automatically invests the rest.
c) You like getting paid early: Both Wealthfront and Chime offer you early direct deposits up to two days in advance for account holders. But the catch here is the employers of the account holders have to qualify.
d) You don’t want to pay high bank fees: There are no excessive charges if you open an account with either of the two options. And on the deposit accounts, there are no monthly maintenance fees as well, which makes your banking fee-free completely.
Conclusion
When you want to choose a financial solution for your banking, investing, borrowing, and budgeting needs, it is always better to look out for various reviews and ratings. Surely there is no shortage of options out there but it is a wise decision to look for points of distinction even between the most similar appearing services. You can access BankQuality to gain deeper insights into these options.