Chime is an online bank that has gained popularity in recent years for its fee-free checking accounts and debit cards. While Chime does not offer traditional investment services like stocks and bonds, there are still a few ways Chime users can invest money through the platform. However, experts warn there are risks associated with using Chime for investments compared to traditional brokerages. This article will explore how to invest with Chime, including Chime Investing automatic savings and Chime Spending accounts investing in crypto. We’ll also look at the potential risks and whether Chime offers adequate protection for your money.
Chime’s Investment Products Are Limited to Savings Features
The core of Chime’s business is providing free online checking and debit card services, not investing. Chime does not currently offer the ability to invest directly in stocks, bonds, mutual funds, or other securities. The only investing-related services offered by Chime are:
– Automatic Savings – Chime encourages saving by offering to round up debit card purchases to the nearest dollar and deposit the change into a Chime Savings account. Users can also set up recurring automatic transfers from their Chime Spending Account to Chime Savings.
– High-Yield Savings – Chime Savings accounts pay an annual percentage yield (APY) of 0.50%, higher than many traditional savings accounts. However, this return merely paces inflation and does not generate real investment growth.
– Cryptocurrency Rewards – Some Chime debit cards offer cryptocurrency rewards when making purchases. This allows account holders to gain exposure to crypto price changes.
While convenient, these limited investing features pale in comparison to the offerings of mainstream investing apps and brokerages. Users cannot directly control investment selections or access advanced trading options.
Using Chime Spending Accounts to Invest Carries Significant Risks
While Chime does not directly offer investing, users can withdraw funds from their Chime Spending Account and invest them however they choose outside the platform. For example, you could use a Chime debit card to fund a cryptocurrency or stock trading account elsewhere.
However, experts strongly warn against using Chime primary accounts for investing for several reasons:
– No SIPC or FDIC insurance for investments – Money withdrawn from Chime and invested elsewhere loses FDIC protections and will not be covered if your investments decline in value.
– Increased fraud risk – Using a Chime debit card on external investment platforms ties the account to risky transactions, increasing fraud liability.
– Transaction delays – Withdrawing funds from Chime to an external investment account can take several business days to process, limiting agility.
– Account monitoring difficulties – Tracking investments funded by Chime withdrawals adds complexity versus a consolidated platform.
Overall, the lack of investment tools and account protections make Chime a poor platform for active trading or investing significant savings. Investors should use mainstream investing apps or brokerages to make trades and hold invested assets.
Use Chime for Basic Savings, Traditional Platforms for Real Investing
Chime provides some helpful basic savings features, but falls far short of a full-service investing platform. The limited investing capabilities and lack of investment protections on Chime make the platform ill-suited for serious investors.
Those looking to save and invest money should consider the following advice when using Chime:
– Take advantage of Chime’s automatic savings features for rainy day funds and short-term goals.
– Maintain the bulk of savings and long-term investments at an FDIC-insured bank or SIPC-protected brokerage account.
– Only use externally linked investment accounts for discretionary investing with money you can afford to lose, due to lack of protections.
– Minimize withdrawals from Chime to external investment accounts to limit fraud risk.
– Use mainstream investing apps and brokerages if you want to actively trade stocks, bonds, mutual funds.
With its core features geared towards convenience and simplicity, Chime aims to be an efficient online bank and spending account, not a replacement for full-service investment firms. Treat Chime as helpful for basic savings, but rely on traditional brokers and investment advisors for managing serious wealth.
While Chime offers some convenient savings features, the platform lacks robust investment products and protections compared to mainstream brokers. The only investing capabilities at Chime are basic savings features like round-up and cryptocurrency rewards. However, directly using Chime accounts to fund external investments is very risky. For real investing, consumers need full-service brokerages with SIPC and FDIC protections, not fintech banking apps like Chime.