Neobanks to Invest in in 2022
A Neobank is a technology business that collaborates with a traditional bank to provide specialized services. They are springing up daily, therefore let’s examine the features and fees of the leading Neobanks.
Disclaimer: My stories(Joseph A Cottrell) on Medium.com are distributed for general informational and educational purposes only and are not intended to constitute legal, tax, accounting or investment advice. I am not a professional financial advisor, attorney or accountant, nor am I holding myself out to be.
Neobanks: What Are They?
Neobanks are founded as a result of collaborations between technology businesses and established banks. The technology business comes out with an innovative or novel financial service. They developed an app to provide that service to clients and partnered with a well-established bank to handle the financial aspects of the company.
This allows the technology business to focus on its core competencies: providing highly effective mobile or web applications and developing new and intriguing financial services. In exchange, the partner bank gains access to new clients through the Neobank’s account opening process. Because the money is kept by a typical bank, Neobanks may provide their clients FDIC protection.
Unlike regular banks, Neobanks often specialize in a limited number of specialty services. Checking accounts are one of the most popular types of accounts offered by Neobanks. Savings accounts and certificates of deposit are less prevalent.
What Are the Most Critical Characteristics of Neobanks?
Neobanks are often created to address a specific issue or to accomplish a certain purpose. For instance, Aspiration was created to assist environmentally aware individuals in banking in a manner that enables them to support green businesses. Others attempt to assist consumers in avoiding costs or early access to their wages.
The most important characteristic of a Neobank to consider is if its unique value offer aligns with your aspirations and demands. If you are unconcerned about the environment, a green Neobank will not appeal to you. However, if you’re looking for a checking account with cash back benefits, there may be a Neobank that’s right for you.
Apart from that, you’ll want to check for the same features as you would with a regular bank. Ascertain if the Neobank has the account kinds you want. Additionally, seek for cheap or no monthly costs and bonuses like as ATM charge refund.
The Most Excellent Neobanks
There are several Neobanks available, with new ones sprouting up daily. If you’re looking for a new bank account, here are a few of the best options.
Chime is a neobank that offers checking and savings accounts, allowing clients to easily access their money and increase their savings without opening a separate account.
The Spending account functions similarly to a checking account in Chime. No monthly charge is required to maintain the account, and there are no overdraft penalties to worry about. Additionally, you may withdraw cash without paying a charge from over 60,000 ATMs, many of which are situated in large businesses.
If you seldom work with cash, you’ll appreciate the ability to lock and unlock your debit card from within the app. This can assist safeguard you against fraud and help you maintain control over your expenditures. Additionally, you’ll have access to direct transfers from your employer up to two days ahead of schedule.
The Savings Account is a simple savings account with a 0.50 percent annual percentage yield. You may replenish your balance both manually and automatically. Additionally, you may round up your debit card transactions to the nearest dollar, automatically putting the difference in your savings.
Once you’ve accumulated funds in your savings account, you may use them to apply for a credit builder credit card. Even if you have no credit or low credit, you may apply for the card and use it to begin developing your credit history.
Consult the Chime Bank
Disclosure for Chime SpotMe® — Eligibility conditions and overdraft limitations apply.
Chime Disclosure — Chime is not a bank, but a financial technology firm. Banking services and debit cards are supplied by The Bancorp Bank or Stride Bank, N.A., both of which are members of the Federal Deposit Insurance Corporation.
Chime cannot promise when the IRS will send files and when money will be made accessible.
Early access to direct deposit monies is contingent upon the payer.
-Annual Percentage Yield (APY) of 0.50 percent is 1- 8x2 the national average! on financial savings None -Savings totals
-No opening Fees
-More than 60,000 ATMs that are fee-free
Use the app to lock and unlock your debit card -Receive direct deposits two days early
Aspiration is a socially conscious Neobank. The firm is committed to being environmentally friendly and to ensuring that client deposits are not used to subsidize fossil fuel enterprises or development.
The firm has an innovative pricing mechanism that enables clients to choose the monthly charge they believe is reasonable, even if that fee is nothing. Customers have the option of subscribing to Aspiration+ for $5.99 per month or $71.88 per year. Aspiration+ complements the services offered by Aspiration.
Aspiration customers may open both spending and savings accounts and get access to over 55,000 fee-free ATMs. Additionally, you’ll get cashback when you use your Aspiration card at certain green companies.
Consumers of Aspiration+ earn a greater rate of interest, receive more cash back, and are reimbursed for one ATM fee each month, making it an attractive bargain for many of the Neobanks’ customers.
Aspiration also provides a credit card in addition to the spending and savings accounts. According to the firm, each time you use your card, it plants a tree, which implies that each time you use the card, you may have a good influence on the environment. Additionally, you can invest in climate-focused investment funds. If you wish to invest in Aspiration’s funds, you may do so through taxable or retirement accounts.
Pay a visit to Aspiration Revolution
Monthly fees: $0 — $16.99
Up to 0.07 percent annual percentage yield
Balance Required: None
Features: Exchange between more than 28 fiat currencies and cryptocurrencies, enhanced card security, and travel advantages
Pay a visit to Aspiration Revolution
Revolut is a fintech business that attempts to simplify currency conversion for clients. If you are a regular traveler, this bank may be ideal for you.
Through the Revolut app, you can quickly and effortlessly swap money between more than 28 currencies and transfer payments to your friends. Additional travel perks include international medical insurance, delayed baggage insurance, airline insurance, and complimentary lounge tickets for delayed flights.
Customers in the United States will benefit from fee-free ATM withdrawals and the chance to receive payments up to two days early when they enroll in direct deposit. Additionally, you may lock and unlock your debit card, as well as create single-use card numbers for online purchases, which can help you keep your card secure.
While Revolut’s basic service is free to use, its premium services, such as international insurance, require a monthly subscription of up to $16.99. It’s critical to weigh the benefits of Revolut against the cost, as even the most costly traditional banks charge less each month.
Pay a visit to Revolut
There are no fees.
0.50 percent annual percentage yield
Balance Required: None
Features: Fee-free investment through a connected brokerage account, FDIC protection of up to $1.25 million, 75,000 domestic and 15,000 overseas fee-free ATMs
Pay a visit to Revolut
Robinhood is a well-known investment app that is well-known for its zero-fee stock and option trading. Additionally, the organization offers a cash management account that acts as a checking and savings account in one.
As with a bank account, Robinhood’s cash management account includes a debit card that may be used to make purchases or cash out at an ATM. The account, like a savings account, pays interest on the amount.
Your cash management account is connected to your Robinhood brokerage account, which means you may spend your cash to finance the account or sell investments to fund the account. Additionally, you can move funds electronically into and out of the account.
Robinhood divides your amount amongst five banks and insures it up to $1.25 million, making it an excellent choice for those with substantial holdings they wish to keep secure.
N26 is a financial firm focusing on mobile that offers a single basic account, the N26 account. It’s a no-fee account with no minimum balance restrictions.
The account has a variety of benefits, such as the opportunity to receive payments up to two days early and savings automation tools. For instance, you can enroll in having your debit card transactions rounded to the nearest dollar and the difference deposited in one of your savings Spaces.
You may use N26 to create Spaces to keep track of your funds. You may create many Spaces, which makes it simple to save for different objectives and track your progress.
N26 also boosts the performance of your debit card. When you use the card at popular merchants or to withdraw cash from an ATM, you might receive rewards. N26 features a fee-free ATM network of over 55,000 locations and also reimburses two out-of-network ATM fees each month.
-Monthly fees: $0 — $16.99
-Up to 0.07 percent annual percentage yield
-Balance Required: None
- 0.35 % 0 -$1 million in FDIC insurance
-Fast transfers to a connected portfolio of investments -Automation tools
-Features: Exchange between more than 28 fiat currencies and cryptocurrencies, enhanced card security, and travel advantages
Wealthfront is a firm that provides robo-advisory services and a cash management account. As with Robinhood’s cash management account, Wealthfront Cash incorporates features of both checking and savings accounts.
The cash management account includes a debit card for making purchases and cash withdrawals. Additionally, there is a bill payment feature that allows you to pay for items like electricity or phone bills.
Wealthfront now offers a package of automation solutions for its cash management accounts, leveraging its robo-advisory technology and experience. For instance, you may automate savings and have Wealthfront manage your budget on your behalf.
If you additionally subscribe to Wealthfront’s robo-advisory services, you may move funds between your cash account and investment portfolio quickly and effortlessly, making it even easier to access your assets or purchase additional shares as needed.
There are no fees.
Minimum Balance: None ($100 to open) Annual Percentage Yield: Up to 0.15 percent
Benefits include unlimited ATM fee refunds, cash back on debit card purchases, and a range of financial services.
LendingClub Banking is a more traditional bank that offers many of the benefits associated with fintech startups.
LendingClub Banking, like a fintech startup, provides fee-free checking accounts with a slew of incentives, including limitless refunds on ATM fees levied by rival banks and returns on debit card transactions. This makes it an excellent alternative for folks who frequently use cash or who do not have rewards credit cards.
Additionally, LendingClub Banking provides things that the majority of fintech firms do not. LendingClub, for example, provides corporate banking services and consumer loans.
If you’re searching for a high-tech bank that offers a competitive checking account, LendingClub Banking may be a good fit. For further information, please see our comprehensive review of LendingClub Banking.
-Up to 0.20 percent annual percentage yield
-There is no minimum balance requirement ($100 to open).
-Automatic investments, a rewards credit card that contributes to your portfolio, and financing options are available.
-Unlimited ATM fee rebates -Earn cash back on debit card transactions LendingClub Banking None 0.15 percent None
-Availability of a range of financial services
Unifimoney is a fintech business specializing in investment that also offers a checking account. The checking account has all of the standard amenities, such as a debit card and checkbook. The account requires a minimum beginning deposit of $100 and charges a monthly fee unless you make a monthly deposit of $2,000 or more or maintain a minimum balance of $20,000. However, the corporation does not mention explicitly how much it will charge if you do not comply with those conditions.
You can link your cash account to the investing service offered by Unifimoney. Enables you to invest in cryptocurrencies, precious metals, equities, and exchange-traded funds (ETFs) or to sign up for a robo-advisory service that will manage your account for you.
Additionally, Unifimoney will soon provide a credit card that gives rewards payable in the form of gold, bitcoin, or cash donations to your investing account. This implies that each time you use the card, you’ll get investment points.
Apart from credit cards, Unifimoney also provides lending services such as student debt consolidation and house loans.
-Variable up to 0.20 percent None (opening fee of $100)
-Investments made automatically
-Rewards credit card that accrues interest -Lending services
Lili is a financial startup focusing on freelancers that offers a business checking account. This checking account provides capabilities that make money management easier for freelancers.
There are no minimum balance requirements or monthly fees associated with this account. Additionally, you may use the connected debit card to withdraw cash from any of the nation’s more than 38,000 ATMs.
Lili’s true value is in its tax preparation features. Your account will track your income and spending and automatically classify them, making it easier for you to complete your taxes and claim any available deductions. Additionally, Lili can set aside funds to pay self-employment taxes automatically.
There are no fees.
Balance Required: None
How Did We Select the Most Appropriate Neobank?
I evaluated several factors when evaluating Neobanks.
What matters most is if the Neobank provides a valuable service. Almost every bank can provide you with a basic checking account. A successful Neobank must provide something distinctive, such as limitless ATM charge rebates or some other incentive, that sets it apart from the competitors.
Another critical element to consider is the cost. While the majority of Neobanks provide fee-free accounts, a handful levy a monthly fee. To make the account worthwhile, the account’s perks must be worth paying for.
Which Neobank Is the Most Appropriate for You?
Which Neobank is best for you is determined by your specific circumstances and the features you seek in a bank account.
If you often use cash, Neobanks with extensive ATM networks and ATM charge reimbursements are your best option. Individuals interested in integrating their banking and investing may choose to collaborate with a business such as Robinhood or Wealthfront.
Consider what you like and hate about your existing bank, and then determine whether a Neobank meets your current bank’s shortcomings.
Digital Banks vs. Neobanks
Neobanks are not to be confused with digital banks. Digital banks are predominantly traditional banks that provide financial services online and via mobile applications. Some banks operate entirely online, while others are traditional brick-and-mortar banks that have expanded their offerings to include online services.
Typically, digital banks offer a comprehensive range of financial services, including deposit accounts and loans.
By contrast, Neobanks are often operated in collaboration with regular banks by technology businesses. They frequently provide a single type of account and cater to specific needs, such as creating a special account for freelancers or waiving overdraft costs for regular over drafters.
Are Neobanks a secure investment?
Yes, Neobanks are completely secure. The majority of Neobanks collaborate with traditional banks that are FDIC-insured, ensuring that they receive the same degree of FDIC protection.
The FDIC insures depositors at covered institutions up to $250,000 per depositor, per account type. If the bank is unable to refund your money, the FDIC will compensate you for the loss.
Are Neobank accounts comparable to traditional bank accounts?
Yes, the Neobanks accounts are legitimate bank accounts. The majority of neobanks collaborate with traditional banks, which retain clients’ money and manage the banking side of things, while the neobank manages technology and innovation.
Is it possible to obtain a loan from a Neobank?
Whether a Neobank lends loans is entirely up to the bank. Certain Neobanks provide loan products like credit cards and other forms of borrowing. However, the majority of Neobanks focus exclusively on one or two products, most frequently a checking or cash management account, and do not issue loans.
Neobanks are fascinating newcomers to the banking sector, and their innovative products and services may be an excellent fit for your financial requirements. Consider the several Neobanks and their accounts. You could just come upon the ideal account.