SAN FRANCISCO, Aug. 27, 2019 /PRNewswire/ -- In a move to help millions of Americans have access to a fee-free safety net, mobile banking company Varo Money, Inc. announced today No Fee Overdraft, a feature where customers can overdraft their bank account balance up to $50 with no fee and no interest when they meet certain eligibility requirements.*
"Financial institutions earned $34.5 billion from overdraft fees alone last year and the vast majority of overdraft fee revenue came from customers who can least afford it," said Colin Walsh, CEO of Varo Money. "Paying for a tank of gas to get to work could cost you a fee of $35 if you're running a few dollars short just before payday. We understand that having a safety net to pay bills and stretching a paycheck is important. We built a way for people to do that safely without having to tap credit cards."
According to the CFPB, the average overdraft is $50.¹ The most common fee associated with overdraft is $35.² Varo's new service allows $50 to be overdrawn but with no fees or other charges for eligible customers.
As the most requested feature by thousands of Varo's customers, the launch of No Fee Overdraft is another step forward in the company's mission to be the best banking company in the United States for consumers looking to build their financial health. No Fee Overdraft adds to the products and services Varo already provides including bank accounts with no monthly fees, high-yield savings accounts with no minimum balance requirement, automated savings tools, and early direct deposit** — all of which are designed to build an individual's financial health.
"As an investor in Varo, I am proud to support a mission-driven company that is actively working on services with broad social impact — eliminating fees while increasing accessibility — to help everyone in America achieve financial success," said Lance Reddick, actor and social impact investor.
4 in 10 millennials overdrew their bank account last year
Four out of 10 millennials incurred at least one overdraft fee in the last year, according to findings in a 2019 Varo survey conducted with Qualtrics.³ Of those who overdrew their account in the past year and paid a fee, the survey showed the majority (41%) paid more than $100 total in fees. A smaller group, 15%, paid more than $200, the survey showed.
In addition to the financial toll of fees, survey respondents also cited a kind of psychological hangover from having paid an overdraft fee, with 59% saying they felt annoyed, taken advantage of, or enraged after being charged a fee.
6 out of 10 Millennials don't have $500 in emergency savings
The survey data also showed just how strapped many young Americans are when it comes to meeting basic expenses. According to Varo's survey, 62% of millennials have had to cut back or give something up in order to pay for a tank of gas in the past year; 14% have had to do this almost every month. An earlier 2018 survey from Varo Money showed that 60% of millennials don't have access to $500 in emergency cash.
Varo is working to become the first mobile-centric national bank in U.S. history, and believes banking should be fee-free, easy, and accessible to everyone through a smartphone.
³Survey data from online survey was conducted by Qualtrics for Varo in June 2019 with 1,100 millennials between the ages of 23 and 38.
Varo bank account services are provided by The Bancorp Bank; Member FDIC.
About Varo Money
Varo Money, Inc. ("Varo") is on a mission to help people make progress with their financial lives. In one mobile app, Varo offers customers no-cost† premium bank accounts, high-interest savings accounts, and tech-first features to help people save and manage their money more easily. Bank account services provided are provided by The Bancorp Bank; Member FDIC. As a fintech leader, Varo has been granted preliminary approval for a de novo national bank charter by the Office of the Comptroller of the Currency (OCC), and is working to become the first mobile-centric national bank in U.S. history. Varo Personal Loans are offered by Varo Money, Inc., under state licenses, subject to application approval. For more information, visit www.nofeeoverdraft.com or www.varomoney.com, like Varo on Facebook, and follow us on Instagram and Twitter @varomoney.
*To be eligible for No Fee Overdraft, customers must make at least 5 debit card purchases each calendar month; and receive payroll or government direct deposits of at least $1,000 each calendar month into their Varo Bank Account.
**Faster access to funds is based on comparison of traditional banking policies and deposit of paper checks from employers and government agencies versus deposits made electronically. Direct Deposit and earlier availability of funds is subject to payer's support of the feature and timing of payer's funding.
†Varo charges no fees for banking services. While Varo does not charge fees for ATM withdrawals, some third-party ATM operators may charge a fee. To avoid ATM fees altogether, customers can use an Allpoint® Network ATM. There are more than 55,000 Allpoint locations worldwide.
SOURCE Varo Money