Latest news with #SpotMe
Economic Times
2 days ago
- Business
- Economic Times
Chime IPO raises $864 million in long-awaited Nasdaq debut, cuts valuation nearly in half—here's what it means for fintech's big revival
Chime IPO has officially hit the stock market, raising $864 million by pricing shares at $27, slightly above expectations. Now trading under the ticker CHYM on Nasdaq, Chime's listing values the fintech at $11.6 billion, down from its $25 billion peak in 2021. Still, investor demand was strong, with shares expected to open at $42, reflecting a 56% jump. As a leading neobank with 8.6 million users, Chime's success could signal a rebound in the fintech IPO market. With steady growth, early profit signs, and top backers, Chime's debut is one of 2025's most watched tech IPOs. Tired of too many ads? Remove Ads Chime's Market Debut Highlights IPO Details : Chime raised $864 million by pricing its IPO at $27 per share , slightly above its marketed range of $24–26. Shares will trade under the ticker CHYM on Nasdaq. : Chime raised by pricing its IPO at , slightly above its marketed range of $24–26. Shares will trade under the ticker on Nasdaq. Valuation Drop : The offering values the fintech at about $11.6 billion fully diluted , sharply lower than the $25 billion private valuation in 2021. : The offering values the fintech at about , sharply lower than the private valuation in 2021. 1st-Day Momentum: Early estimated trading opens around $42/share—a ~56% premium—fueled by strong investor interest and recent fintech IPO successes. Why did Chime slash its valuation from $25 billion to $11.6 billion? Tired of too many ads? Remove Ads What is Chime's business model and how does it make money? MyPay for early access to direct deposits SpotMe, which allows limited overdraft coverage No-fee checking and savings accounts How has Chime performed financially in recent quarters? Who are Chime's major backers and IPO underwriters? What does the Chime IPO mean for the broader fintech market? Tired of too many ads? Remove Ads Is this a turning point for fintech IPOs? FAQs: After years of anticipation, the Chime IPO has finally made its debut on the Nasdaq, raising $864 million and grabbing strong investor attention. The digital banking startup priced its shares at $27, slightly above its marketed range of $24 to $26, signaling rising optimism in the fintech IPO market. Chime is now trading under the ticker symbol CHYM, and early indications suggest a strong opening around $42 per share, representing a 56% jump from its IPO listing not only marks a major milestone for Chime but also signals a possible revival of tech listings in 2025. The IPO values the company at about $11.6 billion fully diluted, a steep drop from its $25 billion private valuation in 2021, but still a major win in today's cautious IPO the peak of the pandemic tech boom, Chime was one of the most valuable fintech startups in the U.S., boasting a $25 billion valuation in 2021. But the market has changed drastically. Rising interest rates, investor focus on profitability, and tighter financial conditions have all led to a valuation reset for many tech the markdown, Chime's fundamentals appear strong. According to Reuters, the offering still attracted robust demand. The company's 2024 revenue grew by over 30%, and it even posted a rare profit in Q1 2025. Though it closed 2024 with a net loss of $25 million, Chime has shown that it's moving toward a more sustainable, profitable future—a factor that likely helped draw in big is a neobank, meaning it offers banking services online without physical branches. As of March 31, 2025, it had around 8.6 million active users, many of whom are everyday Americans looking for simple, low-cost banking solutions. Its standout features include:Chime's primary source of income is interchange fees—a small percentage earned from each debit card transaction. Every swipe adds up, and with millions of users making daily purchases, this model generates substantial recurring revenue. This approach aligns well with cost-conscious consumers, particularly low-to-middle income users, who prefer fee-free and flexible financials show signs of consistent growth. In 2024, the company's total revenue increased by more than 30%. While it posted a $25 million net loss for the year, its Q1 2025 profit stood out and was widely noted in media coverage, including Barron's. This kind of performance is rare for fintechs and indicates that Chime is transitioning from growth-at-all-costs to measured, sustainable shift in strategy is critical, especially at a time when investors are rewarding companies with clearer paths to profitability. Chime seems to be aligning well with this Chime IPO attracted some of the biggest names in the financial world. Its major backers include DST Global, General Atlantic, and ICONIQ Capital—firms known for backing successful tech unicorns. The IPO was managed by leading investment banks such as Morgan Stanley, Goldman Sachs, and JPMorgan Chase. Their involvement adds further credibility and investor confidence to Chime's to Bloomberg, this lineup of high-profile backers and underwriters reflects the significant interest in Chime, despite the broader market's caution toward tech successful Chime IPO could spark momentum for other fintech unicorns like Klarna, Gemini, Medline, and Cerebras Systems, which are all eyeing the public market. In recent months, we've seen a few fintechs like Circle and eToro make progress toward IPOs. If Chime's stock continues to perform well, it could reopen the door for many more tech listings in view Chime as a potential bellwether for fintech IPOs. Its strong debut may help rebuild investor confidence in startups that have stable user growth, revenue streams, and profitability in sight. Still, there are macroeconomic risks to watch—such as shifts in trade policy, inflation trends, and interest rate moves—that could impact IPO valuations going forward, as reported by IPO debut is more than a big raise—it's a signal that the market may be ready to welcome fintechs back after a long pause. While the drop in valuation compared to 2021 is notable, it reflects a broader market correction. What matters now is that Chime is showing financial discipline, solid revenue growth, and a growing base of loyal IPO priced at $27 per share, valuing it at $11.6 earns mainly from interchange fees on debit card transactions.
Time of India
2 days ago
- Business
- Time of India
Chime IPO raises $864 million in long-awaited Nasdaq debut, cuts valuation nearly in half—here's what it means for fintech's big revival
Chime IPO debut raises $864 million, shares pop as fintech market warms up- After years of anticipation, the Chime IPO has finally made its debut on the Nasdaq, raising $864 million and grabbing strong investor attention. The digital banking startup priced its shares at $27, slightly above its marketed range of $24 to $26, signaling rising optimism in the fintech IPO market. Chime is now trading under the ticker symbol CHYM, and early indications suggest a strong opening around $42 per share, representing a 56% jump from its IPO price. This listing not only marks a major milestone for Chime but also signals a possible revival of tech listings in 2025. The IPO values the company at about $11.6 billion fully diluted, a steep drop from its $25 billion private valuation in 2021, but still a major win in today's cautious IPO landscape. Why did Chime slash its valuation from $25 billion to $11.6 billion? During the peak of the pandemic tech boom, Chime was one of the most valuable fintech startups in the U.S., boasting a $25 billion valuation in 2021. But the market has changed drastically. Rising interest rates, investor focus on profitability, and tighter financial conditions have all led to a valuation reset for many tech companies. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 2 Insane Cards Now Charging 0% Intro APR Until Nearly 2027 CompareCredit Undo Despite the markdown, Chime's fundamentals appear strong. According to Reuters, the offering still attracted robust demand. The company's 2024 revenue grew by over 30%, and it even posted a rare profit in Q1 2025. Though it closed 2024 with a net loss of $25 million, Chime has shown that it's moving toward a more sustainable, profitable future—a factor that likely helped draw in big investors. What is Chime's business model and how does it make money? Chime is a neobank, meaning it offers banking services online without physical branches. As of March 31, 2025, it had around 8.6 million active users, many of whom are everyday Americans looking for simple, low-cost banking solutions. Its standout features include: Live Events MyPay for early access to direct deposits SpotMe, which allows limited overdraft coverage No-fee checking and savings accounts Chime's primary source of income is interchange fees—a small percentage earned from each debit card transaction. Every swipe adds up, and with millions of users making daily purchases, this model generates substantial recurring revenue. This approach aligns well with cost-conscious consumers, particularly low-to-middle income users, who prefer fee-free and flexible banking. How has Chime performed financially in recent quarters? Chime's financials show signs of consistent growth. In 2024, the company's total revenue increased by more than 30%. While it posted a $25 million net loss for the year, its Q1 2025 profit stood out and was widely noted in media coverage, including Barron's. This kind of performance is rare for fintechs and indicates that Chime is transitioning from growth-at-all-costs to measured, sustainable expansion. This shift in strategy is critical, especially at a time when investors are rewarding companies with clearer paths to profitability. Chime seems to be aligning well with this expectation. Who are Chime's major backers and IPO underwriters? The Chime IPO attracted some of the biggest names in the financial world. Its major backers include DST Global, General Atlantic, and ICONIQ Capital—firms known for backing successful tech unicorns. The IPO was managed by leading investment banks such as Morgan Stanley, Goldman Sachs, and JPMorgan Chase. Their involvement adds further credibility and investor confidence to Chime's debut. According to Bloomberg, this lineup of high-profile backers and underwriters reflects the significant interest in Chime, despite the broader market's caution toward tech stocks. What does the Chime IPO mean for the broader fintech market? The successful Chime IPO could spark momentum for other fintech unicorns like Klarna, Gemini, Medline, and Cerebras Systems, which are all eyeing the public market. In recent months, we've seen a few fintechs like Circle and eToro make progress toward IPOs. If Chime's stock continues to perform well, it could reopen the door for many more tech listings in 2025. Analysts view Chime as a potential bellwether for fintech IPOs. Its strong debut may help rebuild investor confidence in startups that have stable user growth, revenue streams, and profitability in sight. Still, there are macroeconomic risks to watch—such as shifts in trade policy, inflation trends, and interest rate moves—that could impact IPO valuations going forward, as reported by Is this a turning point for fintech IPOs? Chime's IPO debut is more than a big raise—it's a signal that the market may be ready to welcome fintechs back after a long pause. While the drop in valuation compared to 2021 is notable, it reflects a broader market correction. What matters now is that Chime is showing financial discipline, solid revenue growth, and a growing base of loyal users. FAQs: Q1: What was Chime IPO price and valuation in 2025? Chime IPO priced at $27 per share, valuing it at $11.6 billion. Q2: How does Chime make money as a neobank? Chime earns mainly from interchange fees on debit card transactions.
Yahoo
18-04-2025
- Business
- Yahoo
SoFi vs. Chime: Which fintech offers a better banking experience?
Financial technology (fintech) companies have been revolutionizing the banking industry. Because they operate entirely online, they have lower overhead costs, allowing them to offer perks such as higher deposit account rates, low or no fees, and robust digital tools. Among these companies are SoFi and Chime, both of which Yahoo Finance ranked among the five best fintech companies for 2025. Both offer higher-than-average savings rates and minimal monthly fees, but how do they compare? They differ in key areas, such as their interest rates and the number of products they offer. Here's a closer look at what it's like to bank with SoFi vs. Chime, and which one may be better suited for you. This embedded content is not available in your region. SoFi Technologies, Inc. was founded in 2011. It became a chartered bank in 2022 and has since expanded its offerings and serves more than 10 million customers. Today, the company offers various financial products and services, including bank accounts, lending, loans, mortgages, and investing. Read our full review of SoFi Chime Financial, Inc., is a San Francisco-based fintech company founded in 2012 by Chris Britt and Ryan King. Its mission is to keep fees for its financial products low, making money from interchange fees instead of from consumers. While it offers several products, it primarily focuses on checking and savings. However, its Credit Builder account can be a helpful way for those with poor or limited credit to establish a healthy credit profile. Read our full review of Chime SoFi and Chime offer checking accounts with no monthly fees, minimum balances, or minimum opening deposits. Neither account has overdraft fees, and you can access an extensive ATM network with both accounts. One of the most notable differences is that SoFi's checking account pays up to 0.50% interest on checking account balances, while Chime pays no interest. However, the Chime checking account offers other perks such as early direct deposit and up to $200 in overdraft coverage with the SpotMe® program (SoFi covers up to $50 in overdrafts). Another difference is that SoFi's checking account is bundled with their savings account, so you must open both at the same time. Additionally, SoFi's welcome bonus is up to $300, while Chime's is $100. SoFi made our list of the 10 best free checking accounts available today. Both SoFi and Chime offer high-yield savings accounts with no monthly fees, minimum balances, or minimum opening deposit requirements. However, SoFi's savings account offers a higher interest rate than Chime's savings account. That's one of the reasons why SoFi is included in our list of the 10 best high-yield savings accounts. That said, to earn SoFi's highest rate, you must set up direct deposit or receive $5,000 in qualifying monthly deposits — otherwise, the APY drops to 1%. Meanwhile, Chime offers a flat 2% on all savings balances with no caveats. Originally a student loan refinancing provider, SoFi still offers refinancing and private student loans. Its product line also includes personal loans, which you can use for various purposes, such as home improvement and credit card consolidation. It offers mortgage refinancing and loans, including FHA, VA, and home equity lines of credit (HELOC). You can also invest with SoFi, whether you prefer active investing or robo-investing, and it lets you invest in company IPOs. SoFi also offers a credit card with unlimited 2% cash back. Chime's products and services aren't as extensive, but unlike SoFi, it offers products specifically designed to help customers with past credit issues. The Credit Builder secured card, for example, requires no credit check and has no minimum deposit. Chime also offers a second-chance bank account, which lets you open an account without running a ChexSystems or credit check. In general, SoFi offers higher APYs on its deposit accounts. Its savings account pays up to 3.8% APY versus 2% for Chime. Meanwhile, its checking account pays 0.5% APY, while Chime's checking account pays no interest. However, if you don't qualify for SoFi's highest savings account rate, you only earn 1% APY. With Chime, savings account balances earn 2% APY no matter what. Therefore, the bank with the better rates depends on whether you can meet SoFi's requirements. Both SoFi and Chime offer low-fee banking options, but there are some differences in their fee structures. SoFi does not charge monthly maintenance fees, overdraft fees, or in-network ATM fees. However, you could incur certain fees in some situations. For instance, SoFi charges for outbound domestic wires as well as account inactivity. Chime also charges minimal fees. There are no monthly maintenance fees, overdraft fees, or minimum balance fees. However, it does charge a $2.50 fee for out-of-network ATM withdrawals or over-the-counter cash withdrawals. There is no account inactivity fee. Those who want the best rates on checking and savings account balances and can meet the requirements for direct deposit or qualifying deposits should consider banking with SoFi. In addition, customers who want access to a broader variety of products should consider SoFi. For example, SoFi offers student loans, mortgages, personal loans, and investing. Although Chime's product lines aren't as extensive, it can still be a better choice for some customers. For instance, its Credit Builder Secured Visa Credit Card lets you apply for a credit card with no credit checks and start building your credit. Similarly, it offers second-chance banking, which doesn't require ChexSystems or credit checks. Finally, while SoFi's top savings rates are higher, Chime doesn't have a direct deposit requirement, making its rates more attainable for some customers.
Yahoo
31-03-2025
- Business
- Yahoo
The 5 best neobanks and fintech companies of 2025
Neobanks and fintech companies have revolutionized the way we manage money. They offer sleek apps, competitive interest rates, minimal fees, and innovative features that traditional banks often don't. But with so many options flooding the market, how can you tell which neobanks and fintechs stand out from the crowd? Our team evaluated the top neobanks and fintech companies on the market based on factors such as product offerings, interest rates, fees, digital tools, accessibility, and more. We then ranked these companies and identified the top five best. (See our full methodology here.) This embedded content is not available in your region. Best for a wide variety of banking products and services Social Finance Inc. — better known as SoFi — is an online financial company founded in 2011 by a group of Stanford business school students. In 2012, SoFi launched its Student Loan Refinancing program for federal and private student loans. Today, SoFi serves more than 6.9 million customers and has expanded its product offering to include lending, investing, personal banking, insurance, and more. SoFi offers some of the best interest rates available, particularly for savings and checking accounts. There are no minimum deposit requirements to open an account or earn interest. SoFi also prides itself on its no-fee model — there are no monthly maintenance fees, overdraft fees, or in-network ATM fees. Additionally, the new SoFi Plus app provides up to $1,000 in value each year, including a competitive interest rate on savings, the ability to earn rewards, and unlimited access to financial planners with SoFi Wealth. This premium membership is free with direct deposit to a SoFi checking and savings account. Read our full review of SoFi here Best for building credit Chime is a San Francisco-based financial technology company that offers banking services provided by its partner banks (The Bancorp Bank, N.A. or Stride Bank, N.A., which are both FDIC-insured institutions). Chime offers a smaller suite of banking products with a focus on checking and savings accounts and credit-building tools. The Chime checking account offers a number of benefits, including access to more than 50,000 fee-free ATMs and early direct deposit. Plus, eligible members can overdraw their accounts by up to $200 on debit card purchases without incurring overdraft fees through Chime's SpotMe® feature. Additionally, Chime offers the Chime Credit Builder Secured Visa Credit Card to help account holders build and improve their credit. There is no annual fee or interest, and no minimum deposit. Chime's mobile app has a rating of 4.8 and 4.7 stars on the App Store and Google Play, respectively. Customers can use it to check their account balance, pay bills, and transfer money to and from external bank accounts. Read our full review of Chime here Best for high-yield savings Founded in 2015, Varo Bank is a fully digital bank that offers checking accounts, savings accounts, loans, and credit-building tools. In particular, Varo Bank stands out for its high-yield savings account, which offers an impressive rate of up to 5.00% APY on balances up to $5,000 (balances over this threshold earn 2.50% APY). It also offers digital savings tools such as purchase round-ups and automated savings that will automatically save a percentage of your paycheck each month. Varo Bank customers also enjoy no monthly fees, early direct deposit, cash back at select merchants, and free cash deposits. Varo's mobile app has a rating of 4.9 and 4.7 stars on the App Store and Google Play, respectively. Read our full review of Varo Bank here Best for budgeting Albert is a comprehensive financial management app designed to assist users in budgeting, saving, spending, and investing — all within a single platform. It offers features such as automatic budgeting, early direct deposit, cash-back rewards, and access to financial experts for personalized advice. Its high-yield savings account currently offers a rate of 4% — more than nine times the national average. Funds in Albert Cash accounts are held in a pooled account at Sutton Bank (member FDIC), while funds in Albert Savings accounts are held at FDIC-insured banks, including Coastal Community Bank and Wells Fargo. The Albert App is available for download on the App Store and Google Play and has a rating of 4.6 and 4.5 stars, respectively. Best for immigrants in the US Comun is a newer fintech company that offers banking products and services for the underbanked. It aims to provide more inclusive financial services for immigrants and their families. Banking services are provided by Community Federal Savings Bank, an FDIC-insured institution. Comun's primary product is a checking account that's free to open and doesn't charge any monthly fees or minimums. It also offers early direct deposit, 24/7 bilingual customer support, Zelle capabilities, and remote check deposit. The company also allows customers to send money abroad with a flat fee of $2.99 per transaction, regardless of the destination country or collection method, making it cost-effective to support family and friends overseas. Additionally, users can deposit cash at over 88,000 locations nationwide, including major retailers such as Walmart, Walgreens, CVS, Dollar General, and 7-Eleven. Read more: Can non-U.S. citizens open a bank account? A neobank is a digital-only financial institution operating entirely online without physical branch locations. Also known as "challenger banks," neobanks provide banking services such as checking and savings accounts, debit cards, payments, and financial management tools through user-friendly mobile apps and websites. Learn more: What is a neobank, and is it safe? Both neobanks and digital banks are quite similar, but they differ when it comes to their structure and how they're regulated. Neobanks don't have banking charters and instead offer their services in partnership with traditional, FDIC-insured banks. Meanwhile, digital banks have their own banking licenses or operate as the digital division of licensed banks. Fintech is short for 'financial technology' and refers to companies or platforms that rely on software, mobile apps, AI, and more to create better user experiences, reduce costs, and expand financial access. One of the major benefits of banking with a fintech company is that they often provide lower-cost services because they have less overhead than traditional banks. This can be great news for customers who want to avoid fees and don't necessarily need the convenience of a physical bank. It should be noted that fintechs typically don't provide banking services directly. Instead, they act as a middleman or marketplace in partnership with local or regional banks. Read more: What is fintech? There are several perks and downsides to banking with a neobank or fintech company. These include: Pros Lower fees: Neobanks and fintechs take a digital-first approach to banking. As a result, they face fewer overhead costs and pass savings on to customers in the form of lower fees. Higher deposit rates: In addition to lower fees, fewer overhead costs can also translate to higher rates on deposit accounts, including savings accounts. Convenience: When you bank with a fintech or neobank, all of your banking can be done from the comfort of your home or on the go. You don't have to visit a physical branch to open an account or deposit a check. Cons No in-person support: Even if you can't remember the last time you spoke with a bank teller, it certainly helps when you need to resolve an issue related to your bank account. Many fintechs and neobanks have customer service lines, but this isn't always the case, and you may have to deal with automated chats and/or limited customer service hours. Cash deposits may be difficult: Most neobanks and fintechs don't have their own ATM networks and instead partner with networks such as Allpoint. This could make depositing cash trickier than it would be with a traditional bank that offers branches and its own network of ATMs. Lack of FDIC insurance coverage: Neobanks and fintechs are typically not FDIC-insured. That said, they typically partner with traditional banks to offer coverage on customer deposits. However, this isn't always the case, so it's important to read the fine print to make sure your funds held with a neobank or fintech are protected in case the company fails. Read more: The downfall of Synapse: Is your money really safe with a fintech bank? As long as your neobank partners with an FDIC-insured institution, your deposits will be insured up to the federal limit (or even higher in some cases). There are a few drawbacks to be aware of when banking with a neobank. For one, they do not have physical branches, which could be an issue if you prefer to bank in person. Additionally, customer support may be limited to online or chat-based communication, potentially leading to delays or frustrations when resolving urgent or complicated issues. Fintech is short for 'financial technology' and refers to technology-driven innovations that improve, automate, or simplify financial services. Our grading system, collected and carefully reviewed by our personal finance experts, comprised more than 200 data points for 14 neobanks and fintechs to develop our list of the top five. We evaluated these companies according to several key metrics, with the ability to earn a maximum of 24 points. Here's a closer look at the categories we considered: App store availability: We rewarded fintechs that were available for download on both the Apple App Store and Google Play. Mobile check deposit: Apps that offered remote check deposits earned an extra point. Credit score monitoring: Neobanks and fintechs that offered credit score monitoring earned an extra point. Zelle: Many neobanks and fintechs offer Zelle as an easy way to send and receive money. We rewarded these banks with an extra point for offering Zelle capabilities. In-app customer support and/or virtual assistant: Apps that offered customer support or a virtual assistant within the mobile app earned one point. Average app rating: Apps with a higher average mobile app rating on the Apple and Google storefronts scored more points than those that did not. Ability to transfer funds to external accounts: Neobanks and fintechs that allowed for external bank transfers earned an extra point. Face/touch ID verification: Apps that offered an extra layer of security in the form of face ID and/or fingerprint verification were awarded one point. In-app card controls: Apps allowing for in-app card locking and freezing earned an extra point. Bill pay: Neobanks and fintechs that offered bill pay services earned one point. Early direct deposit: Many banking institutions offer early direct deposit, giving customers access to their paychecks before payday. These institutions earned an extra point for offering this perk. Supports cash deposits: Neobanks and fintechs don't offer physical branches, so depositing cash can be more difficult. We rewarded institutions that supported cash deposits with an extra point. Budgeting and savings tools: Companies that offered customers digital budgeting and savings tools such as savings pods and round-ups earned an extra point. Knowledge base and/or FAQ section: We rewarded neobanks and fintechs with an extra point if they offered a dedicated knowledge base or FAQ section for customers. High-yield or rewards checking: Neobanks and fintechs that offered high-yield or rewards checking accounts earned an extra point. High-yield savings account: Neobanks and fintechs that offered high-yield savings accounts earned one point. No overdraft fees or offers overdraft protection: We rewarded banks that charged zero overdraft fees or offered customers the option to enroll in overdraft protection. Free ATM network and/or ATM reimbursement for out-of-network ATM fees: Neobanks and fintechs that offer a free ATM network and/or reimbursement for fees incurred at out-of-network ATMs earned up to two extra points. FDIC insurance: We rewarded institutions that offered FDIC insurance and gave an extra point for additional insurance above the typical $250,000 limit.
Yahoo
28-03-2025
- Business
- Yahoo
Chime adds instant loans
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. Neobank Chime has rolled out instant loans, offering customers access to up to $500 at a fixed interest rate, without having to go through a credit check, the company said. The product, launched Friday, will offer three-month installment loans to pre-approved Chime customers who use the fintech's checking account for direct deposits. Chime will tap its technology and data sources to determine loan eligibility, and customers pre-approved for a loan will be notified through the Chime app. The product 'is the latest way Chime is helping to unlock financial progress for everyday Americans,' Madhu Muthukumar, chief product officer at Chime, said via email. 'Early feedback on Instant Loans has been overwhelmingly positive, with extremely high customer satisfaction. We believe this reflects our members' trust in Chime's transparent, helpful, and fair financial tools that meet their day-to-day needs,' he added. Chime has been testing the product for quite some time, and it takes seconds to get a loan, a Chime spokesperson said. The loan offering carries no fees for origination, prepayment, or late payment but comes with a fixed rate of $5 for every $100 borrowed, which can be paid back in three monthly installments of $35 for each $100 – roughly a 29.76% annual percentage rate. Since loans are disbursed in $100 increments, the minimum amount to apply for is $100, the spokesperson noted. Customers can opt-in for automated monthly repayments, which have been built to not exceed 10% of monthly cash inflows, the company said. Chime reports on-time payments to credit reporting agencies. 'As members take an Instant Loan, we clearly explain what they are signing up for, and when payments are due — with no hidden costs or compounding interest traps,' Muthukumar said. Founded in 2012 by Chris Britt and Ryan King, Chime touts itself as a digital banking alternative offering fee-free banking. The firm has around 7 million customers, who use its cards for $8 billion in monthly transactions, Forbes reported. According to a survey by Cornerstone Advisors, half of Chime customers consider the neobank their primary checking account provider. The survey compared this to fintechs like SoFi, MoneyLion, Cash App and Current, which typically see about 25% of their customers treating them as a primary banking or payment solution. Chime's instant loan offering follows the neobank's launch of a suite of products last year. In May, Chime unveiled MyPay, offering early access to up to $500 of customer's paycheck, including government benefits, without interest, credit checks, or mandatory fees. In August, the firm expanded its SpotMe feature, a fee-free overdraft service Chime launched in 2019. The new integration allows members to access up to $200 in overdraft coverage when using their credit builder Visa credit card. SpotMe surpassed $30 billion in transactions last year, according to the company. The Bancorp Bank is Chime's banking partner, providing instant loans. Chime also partners with Stride Bank to offer its other banking products. Chime has been exploring options for its initial public offering and had tapped Morgan Stanley for the process, Bloomberg reported in September, citing people familiar with the matter. In December, the publication reported the fintech submitted a confidential filing with the U.S. government for its IPO, aiming to go public this year. Chime declined to comment on its IPO status. Fintech competitors such as Dave have been eager to offer instant loans to give customers access to convenient financing. Dave promised its customers $500 in 5 minutes or less, a cash advance that customers can receive without credit checks, interest or late fees through its ExtraCash account. However, the Federal Trade Commission sued the Los Angeles-based firm, claiming Dave allegedly misled consumers and 'lured' them to its cash advance application, guaranteeing them up to $500 in loans, which they failed to receive. The FTC also noted that the online platform charged consumers who needed financial assistance with undisclosed fees and 'tips' without their consent.
