American consumers have no shortage of branchless options for banking and investing. On balance, that’s a good thing in this context. When your aim is to keep your hard-earned money safe and put it in the best possible position to grow over time, more choice is better than less.
Then again, there’s a fine line between “more” and “overwhelming.” The roster of best online banks on the market grows longer by the month as new entrants arrive and incumbents modernize.
In the interest of avoiding overwhelm, this head-to-head comparison highlights precisely two branchless money management options: Chime and Wealthfront. Both offer free checking accounts with FDIC insurance, a robust array of mobile features, and customer-friendly perks like early direct deposit (when available).
But there’s plenty to distinguish Chime and Wealthfront as well — notably, the latter’s much broader lineup of features and services beyond its deposit account. Use this comparison to decide which of the two is a better fit for your own personal finance needs.
The biggest differences between Wealthfront and Chime revolve around the former’s investment management account, financial planning services, and portfolio line of credit.
Available Account Types
Chime and Wealthfront both offer FDIC-insured deposit accounts. Wealthfront also offers an investment management account and a portfolio line of credit.
Chime’s Available Account Types
Chime has two aptly named deposit accounts: the Spending Account and Savings Account.
- Spending Account. This is a basic checking account with no minimum opening deposit or ongoing minimum balance requirements and no monthly maintenance fees. The account comes with a chip-enabled, Visa-issued debit card accepted anywhere Visa is. Account holders have fee-free access to approximately 38,000 U.S. ATMs through the MoneyPass and Visa Plus Alliance networks. Chime does charge $2.50 per out-of-network ATM withdrawal or in-branch withdrawal. On the plus side, Chime is compatible with Apple Pay, Samsung Pay, and Google Pay, as well as multiple mobile peer-to-peer transfer apps. Other features include a free bill pay solution with electronic payment and check-cutting capabilities and daily balance alerts in the app.
- Savings Account. Chime’s savings account is a basic product with a minimal, variable yield. It has two automated savings tools: Save When You Spend and Save When You Get Paid. The former automatically rounds debit card transactions up to the next dollar and deposits the difference into your savings account. The latter lets you transfer up to 10% of your paycheck into your Chime savings account before the rest hits your spending account.
Note that Chime doesn’t permit joint accounts for couples who’ve merged their finances. To manage household finances with your partner, roommates, or others through a single sign-on, you must link your separate individual Chime deposit accounts using a third-party budgeting app like Mint.
Chime has one additional deposit account feature worth noting: fee-free overdraft protection for account holders who receive direct deposits totaling $500 or more per month. This feature is called SpotMe. Approved users can overdraw up to $100 and retain that negative balance until their next direct deposit without incurring a fee or having the transaction declined. SpotMe does accept voluntary fees — called “tips” — but these aren’t required and don’t affect the user’s experience.
Wealthfront’s Available Account Types
Wealthfront’s account lineup is more diverse than Chime’s. It includes taxable and tax-advantaged investment accounts, a FDIC-insured cash management account with a variable yield and checking-like features that make it suitable for everyday use, and a low-cost portfolio line of credit.
- Cash Account. This is a cash management account with FDIC insurance on balances up to $1 million, a token minimum deposit requirement of $1, a debit card accepted by millions of merchants, mobile check deposit, and a variable yield (currently 0.35% APY). If your employer qualifies, it also promises paycheck direct deposit up to two days early. Other notable features include free bill pay and mobile transfers; no overdraft fees; and Autopilot, a feature that executes automatic rolling transfers to your individual investing account when you specify a maximum Cash Account balance.
- Investment Accounts. Wealthfront’s taxable, tax-advantaged (IRA), and education savings (529 plan) investing accounts have low minimum balance requirements of just $500 and provide periodic, complimentary rebalancing with dynamic tax-loss harvesting. Wealthfront tailors these accounts using low-cost exchange-traded funds (ETFs) that meet the account holder’s risk tolerance and long-term investing objectives. The advisory fee is a flat 0.25% of assets under management annualized, regardless of account type or balance. Component funds’ annual expenses are usually 0.15% or less.
- Portfolio Line of Credit. Wealthfront’s Portfolio Line of Credit is a margin lending product that allows account holders with at least $25,000 in invested assets to borrow up to 30% of their portfolio’s value at low interest rates (currently no more than 3.65%, but subject to change) with no fixed repayment schedule. Portfolio assets serve as collateral for any draws and are sold if the account lapses into delinquency. Wealthfront’s portfolio lines of credit can be used for virtually any legitimate purpose.
Financial Planning and Advice
One of the biggest distinctions between Wealthfront and Chime is the former’s financial planning solutions. Although Wealthfront doesn’t employ client-facing human financial advisors or broker direct relationships between clients and third-party advisors, it does offer automated financial planning modules and a slew of high-level financial content for DIY planners.
Wealthfront’s Financial Planning and Advice Services
Wealthfront offers in-depth guides for users weighing major life decisions, plus one-off financial planning modules for several common life situations.
- Financial Planning Modules. These cover four common life situations or goals: saving for retirement, buying a home, paying for college education, and taking time off to travel. For each, the user answers specific questions related to their assets, plans, goals, and overall financial picture. Wealthfront uses these inputs to generate a detailed plan that lays out the steps needed to achieve the goal as defined. For people not sure where to begin their financial planning journeys, Wealthfront also offers more general financial planning support.
- Guides and Apps for DIY Planners. Wealthfront also offers static but in-depth guides for users who’d simply like to learn more about common financial planning issues. These guides cover topics like homebuying and employee equity, including guidance around preparing for a closely held company’s initial public offering (IPO) and exercising employee stock options. Separately, Wealthfront maintains an app — really, a sophisticated net worth calculator — that helps users calculate and project net worth in a variety of scenarios.
The Verdict: Is Chime or Wealthfront Right for You?
Enough distinguishes Wealthfront and Chime to make this something more than an idle question. Before determining which you should use for your money management needs, carefully consider their respective strong suits and drawbacks.
You Should Open a Chime Account If…
Chime is ideal for your needs if:
- You Don’t Need Extra Bells and Whistles. Chime does not have a lot of extra weight on it. That’s not necessarily a bad thing — it’s a lightweight financial product for users who don’t need much more than basic spending, saving, and money management tools.
- You Want to Be Able to Cut Checks to Payees. Although it’s decidedly mobile-first, Chime does have one old-fashioned feature that could be useful for some account holders: a free bill pay system that offers a paper check option. If your landlord prefers paper rent checks, this feature will certainly come in handy.
You Should Open a Wealthfront Account If…
Wealthfront is a better fit if:
- You’re Seeking a Low-Cost Robo-Advisor. Wealthfront’s low-cost investment management solution is one of the best robo-advisor services on the market today. With nothing similar, Chime simply doesn’t cut it for retail investors.
- You’d Like to Borrow Against the Value of Your Investment Portfolio. Wealthfront’s portfolio line of credit is an excellent alternative to a home equity loan or line of credit — and is vastly superior to high-interest credit cards or unsecured personal loans. Chime doesn’t offer anything similar.
- You Want Financial Planning Help. Although Wealthfront doesn’t have advisors on staff or relationships with third-party advisors, it does offer basic financial planning help, a useful financial calculator app, and in-depth guides for DIYers. Chime, by contrast, offers nothing of the sort.
Both Are Great If…
You can’t go wrong with either Wealthfront or Chime if:
- You Dislike Banking In-Branch. Neither Wealthfront nor Chime have physical bank branches or public offices. That’s how their users like it, albeit with wide-ranging debit card acceptance at millions of merchants worldwide. In either case, the closest you’ll need to come to setting foot in a bank branch is your go-to ATM vestibule — assuming it’s in-network, of course.
- You Need an Extra Nudge to Save. Chime offers two ways to automatically save: a round-up-the-change feature and an automatic paycheck savings feature. Wealthfront automates cash-to-investing transfers with Autopilot, a smart feature that lets you specify a maximum Cash Account balance and automatically invest the rest. Use any (or all) to maximize what you put away.
- You Love Getting Paid Early. Both Wealthfront and Chime offer early direct deposit up to two days in advance for account holders whose employers qualify. This is excellent news for those with tight cash flows — folks for whom every day counts in the race to make it to payday and avoid predatory lending products such as high-interest cash advances or payday loans.
- You’re Tired of Bank Fees. Neither Wealthfront nor Chime charge excessive fees. Indeed, on the deposit account side, neither levies monthly maintenance fees, making for a totally fee-free banking experience under normal circumstances.
The prospect of choosing a new financial solution for your banking, investing, borrowing, and budgeting needs should not inspire dread. Sure, there’s no shortage of choice out there, and some options seem all but interchangeable. But, if you look closely, you’ll find enough points of distinction between even the most similar-seeming services.
That’s certainly the case for Wealthfront and Chime, whose differences far outweigh their similarities. After reading through this detailed comparison of their strengths and weaknesses, here’s hoping you’re inching closer to a decision.