favorite neobanks

Our 10 Favorite Neobanks and Their Advantages to Traditional Banks

As we navigate through 2024, the financial landscape is increasingly dominated by neobanks, which offer a compelling alternative to traditional banking with their cutting-edge technology and customer-centric services. These digital-first entities have revolutionized how we manage money, blending convenience with innovation to meet the growing demands of tech-savvy consumers.

This article delves into the top 10 neobanks of the year, highlighting those that have excelled in providing exceptional user experiences and incorporating features that ensure security, accessibility, and financial empowerment for all their users.

What Are Neobanks?

Neobanks are formed through partnerships between tech companies and existing banks. The tech company comes up with an idea for a new or unique type of banking service. They set up an app to offer that service to customers and partner with an established bank to handle the banking side of the operation.

The tech company can focus on its core competencies: offering highly functional mobile or online apps and innovating new and exciting banking services. In return, the partner bank gets access to new customers who open accounts with the neobank. Because the money is held with the traditional bank, neobanks can offer FDIC protection to their customers.

Unlike traditional banks, neobanks usually focus on a few specific services. Checking accounts are among the most commonly offered accounts by neobanks, while products like savings accounts and CDs are less common.

Our Favorite Neobanks

There are many neobanks out there, and more are popping up every day. If you’re looking for a new bank account, here are 10 of our favorites.

NeobankCoolest Feature
ChimeFee-Free Overdrafts
RevolutCryptocurrency Exchange
VaroHigh-Yield Savings
NubankNubank Rewards Program
SoFi BankCareer Coaching
AlbertHuman Geniuses
StashStock-Back Rewards
LiliTax Buckets
M1FinanceAutomated Investment Pies
DaveNo-Interest Cash Advance

1. Chime

chime

Chime is a leading neobank in the United States that offers a user-friendly banking alternative free from the usual fees associated with traditional banks. Known for its simplicity and customer-centric approach, Chime helps streamline the banking experience for its users through a mobile-first platform that focuses on automated savings tools and easy access to paychecks.

Chime’s appeal lies in its mission to provide financial peace of mind. It offers features like direct deposit advances and automatic savings options, all while maintaining no minimum balance requirements and charging no monthly fees, making it a popular choice for those seeking a modern and hassle-free banking solution.

Three excellent features of Chime:

  1. Fee-Free Overdraft: Chime’s SpotMe feature allows eligible members to overdraft their accounts on debit card purchases without incurring typical overdraft fees, providing a cushion that can be particularly helpful during financial emergencies.
  2. Early Direct Deposit: Members can receive their paychecks up to two days early via Chime’s direct deposit service, accelerating the availability of funds and enhancing convenience and cash flow management.
  3. Automatic Savings Program: Chime offers two automatic savings options: the Save When You Get Paid feature, which automatically transfers a percentage of every paycheck into savings, and the Save When You Spend feature, which rounds up transactions to the nearest dollar and deposits the difference into savings, helping users effortlessly build their savings balance.

2. Revolut

revolut

Revolut is a globally oriented neobank based in the UK. It serves over 15 million customers and focuses on providing versatile financial services across borders without the typical costs and complexities. Launched in 2015, Revolut has grown rapidly due to its robust feature set, which includes multi-currency accounts, cryptocurrency exchange, and budgeting tools. This makes it an attractive option for travelers and digital nomads.

The platform prides itself on offering substantial financial control and transparency. It allows users to manage their money through an intuitive app that supports everything from everyday spending to international investments, with real-time notifications to inform them of their transactions and account changes.

Three excellent features of Revolut

  1. Global Spending and Transfers: Revolut allows users to hold and exchange money in multiple currencies at the interbank exchange rate, which can result in significant savings when traveling or sending money abroad. Additionally, it facilitates no-fee international money transfers in many cases, making it ideal for global users.
  2. Built-in Cryptocurrency Exchange: Users can buy, hold, and exchange cryptocurrencies directly through the Revolut app, seamlessly integrating digital currency transactions with traditional banking services.
  3. Budgeting and Analytics: Revolut provides advanced budgeting tools and real-time spending analytics, helping users manage their finances by setting monthly spending budgets, tracking expenditures across different categories, and receiving instant spending notifications to maintain financial control.

3. Varo

varo

Varo stands out in the burgeoning field of neo-banking by offering an all-mobile banking solution that targets those looking to manage their financial lives digitally. Launched in 2017 and receiving its national bank charter in 2020, Varo distinguishes itself through its commitment to providing a fee-free banking experience, high-interest savings accounts, and tools designed to promote financial health among traditionally underserved communities.

Varo appeals to those aiming for simplicity in banking. Its transparent structure, easy-to-use mobile interfaces, and proactive customer service make Varo a compelling choice for consumers seeking a modern, inclusive financial partner.

Three excellent features of Varo:

  1. High-Yield Savings Account: Varo offers one of the most competitive interest rates in the neo-banking sector with its savings account. Under certain conditions, it can reach up to % APY, helping users grow their savings more rapidly.
  2. No Fees: Varo promotes a no-fee model, meaning there are no monthly maintenance fees, no fees for low balances, and no overdraft fees up to $50, significantly reducing its customers’ financial burden.
  3. Early Direct Deposit: Varo can access direct deposit paychecks up to two days early. This can improve cash flow for users by allowing faster access to funds, aiding in budget management and emergency financial needs.

4. Nubank

nubank

Nubank, founded in Brazil in 2013, has quickly risen to prominence as one of the largest independent digital banks in the world, known for disrupting the traditional banking sector in Latin America. With a strong focus on customer service and user experience, Nubank aims to simplify banking for millions of customers by eliminating complex fees and providing a transparent, intuitive banking platform accessible via a mobile app.

Nubank’s success is driven by its commitment to using technology to empower customers. It offers personalized financial services that cater to the needs of a diverse clientele. Nubank’s appeal is particularly strong among young, tech-savvy individuals who appreciate the ease of managing finances through sleek, user-friendly interfaces.

Three excellent features of Nubank:

  1. NuConta (Digital Account): Nubank’s digital account, NuConta, offers no maintenance fees and provides a high yield like a savings account. This account also allows instant and free peer-to-peer transfers, bill payments, and mobile top-ups, functioning almost like a checking account with savings benefits.
  2. Rewards Program: The Nubank Rewards program is an optional service. Points never expire and can be used to erase purchases from the credit card bill or for shopping at partner stores, giving users flexibility in redeeming rewards.
  3. Credit Card Control: Users have complete control over their Nubank credit card directly from the app, with features allowing them to lock and unlock their card, choose a due date, increase credit limits, and track spending in real time, promoting better financial management and security.

5. SoFi Bank

sofi

SoFi, short for Social Finance, Inc., was established in 2011 as a student loan refinancing platform. Since then, it has evolved into a comprehensive neobank offering various financial services aimed at high-earning, financially savvy individuals. With its expansion into broader personal finance, SoFi provides loans, investment products, insurance, and a cash management account, all integrated into a single user-friendly platform.

This approach positions SoFi as a one-stop financial shop for those looking to manage, grow, and protect their finances efficiently. By offering competitive rates, no account fees, and a suite of financial planning tools, SoFi appeals to a demographic that seeks to maximize their financial outcomes across all areas of personal finance.

Three excellent features of SoFi Bank:

  1. All-in-One Finance App: SoFi’s platform integrates various financial services, including loans, investment accounts, and insurance products, allowing users to streamline their financial management within a single app. This integration simplifies users’ financial logistics, making it easier to navigate personal finance landscapes.
  2. SoFi Money: This cash management account offers high-interest earnings with no account fees and unlimited reimbursement for ATM fees worldwide. It appeals to users who travel frequently or prefer to access their funds flexibly.
  3. Member Benefits: SoFi provides exclusive benefits to its members, such as career coaching, personalized financial planning, and member rate discounts on additional products. These benefits support users’ broader financial and career aspirations, adding value beyond traditional banking products.

6. Albert

albert

Albert is a neobank and financial advisory platform that combines banking, saving, investing, and budgeting tools into one seamless experience. It is designed to automate and simplify personal finance management for its users. Launched to help customers achieve financial wellness, Albert distinguishes itself with a unique blend of technology-driven financial services and human expertise.

Users can interact with human financial experts, such as Albert Geniuses, who provide personalized advice tailored to individual financial situations. This hybrid approach and an easy-to-use app make Albert enticing to those seeking digital convenience and financial advisors’ insight to optimize their economic lives.

Three excellent features of Albert:

  1. Human Financial Experts (Albert Geniuses): Albert offers access to human financial advisors, enabling users to receive personalized guidance on budgeting, saving, investing, and other financial decisions, bridging the gap between traditional financial advising and modern fintech convenience.
  2. Automated Savings: Albert’s smart savings feature automatically analyzes users’ income and spending habits to determine when and how much money to tuck away without impacting their daily financial needs, thus simplifying the savings process.
  3. Instant Cash Advances: To help manage cash flow shortfalls, Albert can access instant cash advances, which are interest-free up to a certain limit based on the users’ bank account balances and transaction history. These advances offer a cushion in times of need.

7. Stash

stash

Stash is an innovative neobank and investment platform launched in 2015, designed to integrate banking, saving, and investing into a single, user-friendly service. Aimed primarily at beginner investors and those looking to grow their financial knowledge, Stash simplifies the investment process by allowing users to start investing with small amounts of money and offering educational resources to guide their financial decisions.

The platform encourages a healthy financial lifestyle through features like Stock-Back® rewards, where purchases made with the Stash debit card earn stock in various companies. This approach democratizes financial services and empowers users to build their portfolios as they spend, making Stash an excellent choice for individuals new to investing or seeking to make everyday transactions more financially productive.

Three excellent features of Stash:

  1. Fractional Shares Investing: Stash allows users to buy fractional shares of stocks and ETFs, enabling investment with as little as $5. This feature allows users with limited funds to participate in the stock market and diversify their portfolios.
  2. Stock-Back® Rewards: When users shop with their Stash debit card, they earn fractional shares of stock from the companies where they spend money or in other selected investments, thus integrating spending and investing into a single act.
  3. Personalized Investment Guidance: Stash offers tailored investment advice based on individual risk tolerance and financial goals. This advice is supported by educational content that helps users make informed financial decisions and fosters a deeper understanding of investing principles.

8. Lili

lili

Lili is a neobank specifically designed for freelancers and independent contractors. It focuses on simplifying self-employed individuals’ often complex financial needs. Launched in 2018, Lili combines traditional banking features with tools tailored to the unique challenges of gig economy workers, such as tax preparation, expense management, and financial insights that cater to those without steady paychecks.

The platform’s all-in-one app seamlessly integrates banking and business tools, enabling users to manage their professional and personal finances in one place. Lili’s dedication to serving the freelance community with customized solutions like real-time expense tracking and automatic tax savings highlights its commitment to enhancing financial health and easing the administrative burden for its users.

Three excellent features of Lili:

  1. Tax Bucket: This standout feature allows users to automatically set aside a percentage of their income in a separate sub-account for taxes, ensuring they’re prepared for tax season without manual calculations.
  2. Expense Management: Lili provides an integrated expense management tool that automatically categorizes expenses and lets users swipe to classify business versus personal expenses. This feature is especially useful for maintaining organized financial records and simplifying tax deductions.
  3. Real-Time Activity Alerts: Users receive instant notifications for all account activities, helping them monitor their financial movements and account security. This immediate feedback is crucial for freelancers who must monitor their cash flow closely and react quickly to discrepancies.

Lili is a financial technology company, not a bank. Banking services provided by Sunrise Banks N.A., Member FDIC.

9. M1 Finance

m1 finance

M1 Finance is a distinctive neobank and investment platform that merges key banking and automated investing aspects, providing a comprehensive approach to personal finance management. Launched in 2015, M1 Finance caters to users seeking a high degree of customization in their investment strategy while enjoying the simplicity of a digital bank.

The platform is particularly known for its “Pies” investment feature, which allows users to create and manage a portfolio divided into slices of chosen stocks and ETFs, automating investments according to preset preferences. This integrated solution appeals to novice and experienced investors by offering a hands-off approach to portfolio management combined with robust financial tools, simplifying the growing and managing wealth process.

Three excellent features of M1 Finance:

  1. Automated Investment “Pies”: M1’s signature feature allows users to build customized portfolios, or “Pies,” consisting of various “slices” representing different stocks or ETFs. Investments can be automatically balanced according to the user’s specified allocations, facilitating a personalized and diversified investment strategy.
  2. Borrowing Capability: M1 Finance provides users with a flexible, low-interest line of credit with a minimum account balance. This feature allows users to borrow against their investment portfolio without needing to liquidate assets, offering a convenient way to access funds for large purchases or emergencies.
  3. M1 Spend: This checking account integrates directly with the investment account, enabling seamless transfers between spending and investing. M1 Spend also offers unique benefits such as high yields on balances and cash back on transactions when certain conditions are met, enhancing the overall banking experience.

10. Dave

dave

Dave is a neobank that primarily targets users facing financial challenges. It offers tools and services to help prevent overdraft fees and manage tight budgets. Established in 2017, Dave has quickly gained popularity by providing a financial safety net with features such as small cash advances and budgeting assistance to help users avoid the steep costs of traditional banking errors like overdrafts.

Dave emphasizes financial health through proactive balance alerts and low-balance protection options, fostering greater control over personal finances. Dave’s user-friendly app also integrates side hustle opportunities, providing users with avenues to earn extra income and enhancing its mission to improve financial stability for its clientele.

Three excellent features of Dave:

  1. No-Interest Cash Advances: Dave offers its users the ability to get cash advances up to $200 without interest. These advances can help cover expenses until the next paycheck and avoid overdraft fees.
  2. Side Hustle Feature: The app connects users with gig economy jobs and other side hustles within their area, facilitating opportunities to earn additional income through partnerships with various companies.
  3. Budgeting Tools: Dave provides personalized budgeting tools that analyze users’ spending patterns, predict upcoming expenses, and send alerts about upcoming bills, helping them manage finances more effectively and avoid potential shortfalls.

How Did We Choose Our Favorite Neobanks?

When looking at neobanks, we consider five very important factors.

  1. Financial Products and Features: Evaluate the range of products and services offered. This might include checking and savings accounts, loans, budgeting tools, investment options, etc. The best neobank should offer competitive rates, fees, and innovative features that align with your financial habits and goals.
  2. Fees and Rates: Transparency in fees is crucial. Choose a neobank that offers clear, low, or no fees for routine transactions, maintenance, and other services. Competitive interest rates on savings accounts and deposits can also be a significant advantage.
  3. Customer Support and Service: Effective support is vital. Ensure the neobank offers multiple support channels like chat, email, and phone. Responsive and helpful customer service can greatly enhance your banking experience, especially when dealing with financial uncertainties or technical issues.
  4. Security Measures: Look for a neobank that prioritizes your financial security with features like two-factor authentication, encrypted data storage, and fraud detection systems. The bank must also comply with relevant financial regulations and use the latest technology to protect your money and personal information.
  5. User Experience: Opt for a neobank that offers a seamless and intuitive mobile and web interface. This includes ease of account setup, app usability, clarity of information, efficient customer service, and overall satisfaction with daily banking operations.

The most important thing is whether the neobank offers a valuable service. You can get a basic checking account from almost any bank. A good neobank has to offer something unique like unlimited ATM fee rebates or some other perk to differentiate it from the competition.

Another important factor is cost. Most neobanks offer fee-free accounts, but a few charge a monthly fee. The benefits must be worth paying for an account to be worth opening.

Which Neobank Is Best For You?

Which neobank is right depends on your situation and what you want in a bank account.

If you use cash regularly, neobanks that offer large ATM networks and ATM fee rebates are the best choice. Someone looking to integrate their banking and investing might want to work with a company like Stash or M1 Finance.

Consider what you like and dislike about your current bank, then consider whether there’s a neobank that addresses its drawbacks.

Neobanks vs. Digital Banks

Neobanks are distinct from digital banks. Digital banks are largely traditional banks that offer their banking services online and through mobile apps. Some operate online, while others are brick-and-mortar banks that have also expanded to offer online services.

Digital banks typically have full banking services, including deposit accounts and lending.

By contrast, neobanks are usually operated by technology companies in partnership with traditional banks. They often offer just one type of account and aim to meet specific needs, such as designing an account for freelancers or eliminating overdraft fees for frequent overdrafts.

Frequently Asked Questions (FAQ)

Are neobank accounts real bank accounts?

Yes, the accounts offered by neobanks are real bank accounts. Most neobanks partner with traditional banks that hold customers’ money and handle banking, while neobank handle technology and innovation.

Are neobanks safe?

Yes, neobanks are safe to use. Most neobanks partner with traditional banks insured by the Federal Deposit Insurance Corporation, receiving the same FDIC protection level.

The FDIC offers insurance for up to $250,000 per depositor, per account type at covered banks. If the bank cannot return your deposited money, the FDIC will reimburse you for the lost amount.

Can you get a loan from a neobank?

Whether a neobank offers loans will depend on the bank in question. Some neobanks offer loan products, such as credit cards or other types of loans. However, most neobanks focus on just one or two products, often a checking or cash management account, and don’t offer loans.

Final Thought on Our Favorite Neobanks

The neobanks listed above represent the pinnacle of digital banking innovation in 2024, each offering unique features that cater to the diverse needs of modern consumers. From robust financial tools and enhanced security measures to exceptional customer service and sustainable banking options, these neobanks are not just redefining personal finance; they’re making it easier, safer, and more accessible for everyone.

As the financial landscape evolves, choosing the right neobank could be a pivotal step in managing your financial future effectively. Whether you’re a savvy investor, a budget-conscious spender, or somewhere in between, there’s likely a neobank on this list that meets your financial goals and lifestyle needs.