Savings help alleviate the monetary fallout from the COVID-19 pandemic
SAN FRANCISCO — September 2, 2020: Varo Money, Inc., the first consumer fintech in US history to become a national bank, today announced it has saved its customers more than $100 million in overdraft fees during the past year* and remains committed to supporting hardworking Americans as the country waits for an economic reset.
At a time when Americans are facing severe hardships resulting from the pandemic and economic crisis, every penny counts. Yet none of America’s 10 largest banks has reduced or waived its overdraft fees. According to the Center for Responsible Lending, the largest US banks took $11.7 billion in overdraft fees from the accounts of American consumers in 2019. With the ongoing COVID-19 crisis, more American households are experiencing cash flow volatility and financial insecurity – meaning at a time when consumers can least afford it, big banks are likely to earn even more from these fees this year.
Through its partnership with The Bancorp Bank, Varo continues to provide significant savings to Americans with its industry-first No-Fee Overdraft (NFO). It allows qualified customers to overdraw their bank account up to $50** with no fees. Three-quarters of Americans support suspending overdraft fees during the COVID crisis. Varo knows these practices are harmful to the financial health of consumers and is leading the way with innovative banking services to help everyone make the most of their money.
“I instantly fell headfirst for Varo,” said Varo customer Brianna. “I love everything about the services Varo provides, especially getting my work check two days early and being able to overdraft at no fee! Varo has changed my life and perspective on online banking.”***
“Fees, such as overdraft, are often charged to consumers who can least afford them, a model that Varo is fundamentally opposed to,” said Colin Walsh, founder and CEO of Varo Money. “Over the past year, Varo customers have been able to benefit from our No-Fee Overdraft – offering a short-term bridge to help our customers stretch their finances to the next paycheck. It’s a clear example of our vision for a better way to bank for everyone.”
Overdraft fees are particularly harmful to the financial health of the consumer. The average amount an account is overdrawn is only $20 for three days, yet the average overdraft fee is $35. What’s more, banks may also charge multiple overdraft fees per day, leading to compound fees that can add up to hundreds of dollars.
“Overdraft fees often cover the costs of offering “free checking.” This typically means that the people who can least afford it are subsidizing banking for everyone else,” said Mariel Beasley, co-founder of the Common Cents Lab. “We need financial products that can still give households quick and easy access to small dollar credit, but in a way that is more fair, more equitable, and without the punishing price-tag.”
With no near-term economic recovery in sight, consumers are actively looking for ways to stretch their money further. Switching to a digital bank can help them avoid punitive fees. Beyond NFO, Varo offers premium banking that’s wholly centered on improving customers’ financial health, including paying meaningful interest on savings accounts and auto-savings tools that make it easy to build financial resilience.
Varo is on a mission to help people become more financially resilient. Through its mobile app, Varo offers customers premium bank accounts that have no minimum balance requirement or monthly account fee, high-interest savings accounts, and tech-first features to help people save and manage their money more easily. Varo is the first consumer fintech to be granted a national bank charter by the Office of the Comptroller of the Currency. For more information, visit www.varomoney.com, like Varo on Facebook, and follow us on Instagram and Twitter @varomoney.
Bank account services provided by The Bancorp Bank; Member FDIC.
*Overdraft fee savings calculated by: Frequency of Varo customers overdrawing account with No Fee Overdraft from August 2019 through August 2020 multiplied by average overdraft fee.
**Meet both of these requirements to qualify: Make at least five qualifying Varo Visa® Debit Card purchases in each calendar month AND receive total payroll or government direct deposits of $1,000 or more in the same calendar month. Once you qualify, enroll by turning on No Fee Overdraft in the app. Overdraft available for any debit card transactions only.
***Early access to direct deposit funds depends on timing of payer’s submission of deposits. We generally post such deposits on the day they are received which may be up to 2 days earlier than the payer’s scheduled payment date.