American workers often face short-term liquidity crises. The right banking products, developed the right way, can help.

If we innovate with American workers’ financial needs in mind, we can provide financial products and services that actually help keep them from falling behind — and set the stage for getting ahead.

By Jennifer Kuperman, Chief Corporate Affairs Officer, Chime

August 29, 2024

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What would you do if your basement flooded tomorrow? Or if your kid had to go to urgent care?

Chances are pretty high that you’d deal with it right away. If you’re lucky, you’d be able to pay for the unexpected cost, whether that’s out of pocket or on a low-interest credit card.

But if you’re like most Americans, you may not have those options — or any affordable options — available to you.

Instead, you’d face a short-term liquidity crisis.

It’s more common than you might think, which is why we’re highlighting it this Labor Day and throughout the month of September. Right now, roughly 65 percent of Americans are living paycheck to paycheck,¹ stretching funds from one pay period to the next. While their circumstances differ greatly, the core problem they face is the same: The vast majority don’t have enough money saved to cover a $500 expense² and don’t qualify for low-cost credit from traditional banks.

Most credit cards and loans typically require minimum credit scores, minimum account tenures, positive account balances and/or minimum daily balances, criteria some Americans can’t meet.

So instead, they pursue alternatives. But it’s hard — and expensive — to access the cash they need. To cover the cost in the short term, they might overdraft on their account, use a high-interest credit card or even take out a payday loan.

More than a decade of consumer-first innovation

The traditional banking system is designed, in many ways, to exploit everyday Americans’ liquidity challenges, not help solve them.

So in 2012, our co-founders Chris Britt and Ryan King decided to start Chime, a new kind of financial services company. One whose interests were fully aligned with consumers’ and whose products were designed to help everyday Americans make progress.

Since our founding, we’ve never charged overdraft or minimum balance fees.

Instead, we’ve built easy, transparent and fair banking and payment products that help solve the liquidity crisis for real people across America.

In 2014, we introduced checking and savings accounts with no monthly fees or minimum balance requirements, because saving money shouldn’t cost you money.

In 2015, Chime introduced early direct deposits.⁵ Believe it or not, many banks know your direct deposit information prior to payday, even if employees don’t see their funds until the day of. To help make life easier for our members, we figured out how to expedite the process. Many banks have adopted this and millions of Americans — not just Chime members — are now able to receive their paychecks up to two days early.

But we didn’t stop there. In 2019, Chime pioneered the concept of fee-free overdraft, giving our members a little bit of cushion and security when they need it most. Called SpotMe^®, this service provides up to $200 in fee-free overdraft,⁶ has saved our members billions of dollars in fees and enabled them to add billions to their savings.

During the pandemic, we extended the same technology for early direct deposits to advance our members’ stimulus payments. As a result, Chime members got their funds sooner than the millions of Americans who waited days — or even weeks — to get theirs.

And soon after that, we released a secured credit card⁷ that helps our members build credit — even if they’ve struggled with credit in the past or never had credit before. By providing a new path to credit building, the Credit Builder Visa^® Credit Card has helped members raise their credit scores by an average of 30 points.⁸

Fixing what’s broken

Today, we’re proud to be the primary account relationship for more than seven million Americans — most of whom live paycheck to paycheck. Chime members come from cities, suburbs, exurban and rural areas, spanning all 50 states, every generation and all walks of life, but the challenge of short-term liquidity affects them all.

So we’re always looking for new ways to help them. Recently, after examining the data,⁹ we found that the traditional two-week pay cycle itself contributes to the liquidity crisis, forcing many American workers to turn to high-interest credit cards — or even payday loans — when their funds run out or an unexpected expense hits before payday.

That’s why we developed MyPay^TM. MyPay¹⁰ gives our members a free or low-cost way to access their money between paydays.

When Chime members started using MyPaycheck, a predecessor to MyPay, 60 percent felt more comfortable handling their finances. Additionally, 85 percent of members who relied on payday loans were able to stop; of that number, 53 percent saved $75 or more in the first 30 days using MyPaycheck — money they could put toward other expenses or into savings.¹¹

We’re proud to highlight MyPay this Labor Day as we believe it puts Americans back in control of when they get paid, giving them more flexibility with their finances.

Just the beginning

Over the past decade, our innovative products have offered consumers more choices and created a more competitive financial services landscape. Forbes has taken note, writing, “Chime has nudged the banking industry to adopt more customer-friendly features.”¹²

And there’s mounting evidence to prove it. While banks collected upwards of $12 billion in fees in 2019, that figure dropped to $7.7 billion by 2022.¹³ This is fintech innovation at work: spurring competition across banking and creating better outcomes for consumers.

After more than a decade of providing lowest-cost basic banking services, we’ve received countless insights into our members’ challenges and needs and have been inspired by their spirit, tenacity and grit. American workers give it their all, and we’re all in on giving them what they need to succeed. We’re honored to have earned their trust and excited to bring them even more products and services to help them overcome the liquidity crisis — and make progress toward their long-term goals.

Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A. Deposits are FDIC-insured through The Bancorp Bank, N.A. or Stride Bank, N.A. up to applicable limits. MyPay^TM line of credit provided by The Bancorp Bank, N.A. or Stride Bank, N.A. The Chime Credit Builder Visa^® Credit Card is issued by The Bancorp Bank, N.A. or Stride Bank, N.A. pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted.

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