Chime Financial, Inc. (“Chime”) is pleased to submit this statement for the record on the Subcommittee on Consumer Protection and Financial Institution’s hearing on, “The End of Overdraft Fees? Examining the Movement to Eliminate the Fees Costing Consumers Billions.” Chime thanks Chairman Perlmutter and Ranking Member Luetkemeyer for holding this important hearing and offers our strong support for the Subcommittee’s goal of ensuring that consumers have access to high quality and transparent financial products. Chime has always believed eliminating overdraft fees is the right thing to do, which is why Chime has led on fee-free overdraft since 2018.
Chime is a member-obsessed financial technology company that was founded in 2012 on the premise that basic banking services should be helpful, easy and affordable. Our mission is to help our members – everyday people – achieve financial peace of mind. Chime’s business model doesn’t rely on overdraft fees, monthly service fees, minimum balance requirements and other features that penalize the millions of consumers who spend down their accounts each month.
The current consumer banking market does not work well for millions of Americans, with huge unmet needs across all areas of their financial lives. Innovation on overdraft from companies like Chime as well as pressure from Congress and financial regulators – particularly the CFPB – has driven some positive changes to overdraft policies, leading to better outcomes for consumers. Since 2018, Chime has offered fee-free overdrafts through its “SpotMe” program, allowing members to overdraft on ATM withdrawals and debit card purchases up to $200 with no fees. Over the past 12 months, Chime has spotted members 1 million times per day, avoiding billions in overdraft fees on daily essentials like gas and groceries. SpotMe is one of Chime’s most popular offerings, with approximately 56% of Chime’s active members enrolled. As a result of leadership by Chime and others on overdraft, we are pleased that we are now witnessing a “race to the top” in this space.
We are proud that our business model allows us to align with our customers’ interests and we’ve been able to bring other products to market that were unavailable to many consumers just a few years ago. This includes: free access to paychecks up to two-days early, accounts with no monthly fees or account minimums, and a deposit- and interest- free secured credit card that helps members safely build credit and doesn’t require a credit check to access. As a result of this consumer-first model, millions of people access banking services through Chime. In fact, Chime is one of the most highly recommended financial services providers in the United States 1 among both traditional banks and fintechs – and we are enormously proud of the trust that our members place in us and their willingness to recommend us to their family and friends.
Chime is not a bank; instead Chime partners with two community banks to meet the growing consumer demand for faster, lower-cost choices in financial services. Our bank partner model allows us to offer products at scale that are fully regulated and safe for consumers, including member deposit accounts which are held at our FDIC-insured partner banks. Our products are developed in compliance with all applicable banking laws and regulations, and we are overseen by our bank partners as well as their federal banking regulators. 2 By leveraging Chime’s platform investments and leadership in technology-driven financial innovations, Chime’s partners are able to better compete by expanding their customer base. Our proven partner bank model has had a positive impact on our members and has helped to create a more competitive and fair financial services industry.
Chime strives to be a resource to help our members manage their finances, avoid unnecessary fees and create a solid financial foundation. Our product offerings will continue to grow with our members: approximately 77% of active members consider Chime to be their primary financial account; and nearly 60% of Chime members are 35 or younger. Moving forward, Chime will continue to create consumer-aligned products that authentically help our members achieve financial peace of mind and, we hope, will help set an example for the financial services industry.
We thank the Subcommittee for holding this important hearing and for its leadership on the critical issues discussed today.