Is Varo Bank Safe and How Does It Work?

FT Contributor
A couple greeting a banker.

The average cost of U.S. banking fees recently hit an all-time high. CBS News reported that ATM fees from out-of-network cash machines now average $4.72 per withdrawal. With overdraft penalties costing over $33 each, paying for a $5 latte from your overdrawn account could end up costing you almost $40. If you’re on a strict budget or would like to put the fees in your own pocket (and not the bank’s) it’s time to look for an alternative bank.

Banks make money in many ways — consider switching to an online bank. The money an online financial institution saves on real estate, employees, and paper supplies can go back to you in the form of free services and higher interest rates on your savings. You could save hundreds of dollars per year in random banking fees just for having an account with Varo Bank, which operates entirely online.

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How Does Varo Bank Work?

Varo Bank was founded in 2015 and offers many of the services you’d expect from a bank. You can open a checking account, grow your savings by depositing funds in an interest-earning savings account, send and receive money, and more. Varo Bank is an online-only institution. As with other online banks, you’ll need to download the mobile banking app or access the Varo Bank website to handle your banking needs.

The startup initially developed its accessible and easy-to-use mobile platform and website by having banking veterans collaborate with tech experts. Varo Bank recruited top talent from companies including Amazon, Apple, Citi, Instagram, and Wells Fargo to develop a unique banking product.

Is Varo a Real Bank?

You may have never heard about Varo Bank or seen any physical bank branches but the online bank is real. Major publications such as the Wall Street Journal, Forbes, and the New York Times have written about Varo Bank and its progress from inception to today.

Your money is backed and protected by the federal government up to $250,000. Varo Bank’s partnership with Bancorp Bank means your funds are covered by the Federal Deposit Insurance Corporation (FDIC).

Varo Bank Financial Services

Check out Varo Bank’s features and services:

  • Monthly fees: No monthly maintenance fees or any fees whatsoever;
  • ATMs: Withdraw for free at over 55,000 Allpoint ATMs worldwide;
  • Minimum balance requirements: None;
  • Foreign transaction fees: None;
  • Debit card: Free;
  • Connect with: Apple Pay, Cash App, Google Pay, PayPal, and Venmo;
  • Direct deposits: Receive your direct deposits up to two days early;
  • Overdraft fees: Varo Bank will pay overdrafts up to $50 for free as long as you receive at least $1,000 in direct deposits per month and make at least five monthly debit card purchases;
  • Checking accounts: Apply online in just a few steps to open a checking account;
  • Savings accounts: Earn 1.92% annual percentage yield (APY) with no requirements or 2.80% APY for account balances up to $50,000 when you receive at least $1,000 in direct deposits per month and make at least five monthly debit card purchases;
  • Check deposits: Possible through the mobile banking app;
  • Cash deposits: Deposit cash at over 90,000 retail store cash registers nationwide offering Green Dot Reloads (for a fee);
  • Personal loans: Available for up to $25,000;
  • Banking app features: Customize alerts to track spending, set financial goals, and automate your savings;
  • Customer service: Available seven days a week.

The Pros and Cons of an Account With Varo Bank

There are many features to compare when deciding if opening a Varo Bank account is the best decision. Here’s a break down of the pros and cons:


  • No monthly fees;
  • No minimum balance requirements;
  • Receive your direct deposit payments two days early;
  • Overdrafts up to $50 will be honored without overdraft penalty fees;
  • Access to over 55,000 Allpoint ATMs worldwide, many of which are located in major retailers such as Walgreens, Target stores, and more;
  • Instant transfers;
  • Mobile check deposits;
  • One of the few online banks that have a cash deposit feature;
  • High interest rates paid on savings balances;
  • U.S.-based customer service available seven days a week;
  • Personal loans are available;
  • Your money is safe thanks to Federal Deposit Insurance Corporation (FDIC) coverage.


There are not many cons to list. Some of the drawbacks to banking with Varo Bank include:

  • No credit cards available;
  • You’ll pay fees for cash deposits because they go through a third-party service;
  • Mobile-only banking may be a problem if you’re not comfortable with tech;
  • No physical bank branches.

Is Varo Right for You?

If you’re struggling to choose the right bank, there are many things to think about. Most banks are designed for a particular type of customer. Varo Bank is best for individuals who care about social causes such as equality and non-discrimination and don’t mind doing all their banking from their mobile phone or smart device. Traditionalists not interested in banking from a mobile app and who prefer establishing a personal relationship with a banker may be better off choosing a bank with physical branches.

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