Although the word “bank” was once synonymous with a physical location, the reality is that more and more banks occupy only digital space. Varo, founded in 2015, is one of the many options available to today’s bankers — if...

Although the word “bank” was once synonymous with a physical location, the reality is that more and more banks occupy only digital space. Varo, founded in 2015, is one of the many options available to today’s bankers — if they’re willing to forgo the ability to visit an actual bank building, that is.

Like other online-only banks, Varo offers deposit and checking accounts with low fees and high interest-earning rates, making it an attractive alternative to more traditional banking.

However, Varo doesn’t offer small business banking, credit cards, loans, or other extras that may be necessary for some customers, and the way it handles cash deposits is clunky and costly.

If you’re in the market for a new personal bank account, read on to learn whether or not Varo might be a fit.

In this review:

Varo Bank: Pros and Cons Banking With Varo Account Fees Customer Service Is Varo Right For You? Our Bank Review Methodology

Varo Bank Review: The Pros and Cons

Here’s what we loved about Varo — and what we didn’t, so much.

Pros

“No fees” means no fees: no monthly maintenance cost or minimum account balances, or overdraft fees, and no foreign transaction or card replacement fees, either. Varo offers early direct deposit, which could mean you get access to your cash up to two days earlier. Its No Fee Overdraft service spots you up to $50 without any interest, so long as you meet the minimum qualifications. (If you don’t, or don’t opt for the service, your card will simply be declined at no cost to you.) Varo offers substantial interest earning potential on its savings accounts, particularly if you meet the eligibility requirements for its higher APY — which include an account maximum rather than an account minimum.

Cons

Varo account holders can only deposit cash through the Green Dot Network, which is both inconvenient and costly: Those transactions cost up to $4.95 a pop. Varo doesn’t offer small business banking, credit cards, or loans; its total line of financial products is limited. Although there are no foreign transaction fees, in-network Varo ATMs are only available in a small selection of countries outside the U.S. (outlined below).

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Banking with Varo: How We Rate It

Checking

Grade: A

Varo’s online bank account carries no monthly maintenance fee or minimum balance, and they don’t assess overdraft fees, either.

In fact, you may even qualify for its No Fee Overdraft service, which allows you overdraw your account up to $50 on debit card purchases and pay it back within 30 days with no fees or interest charges. (To be eligible for No Fee Overdraft, you’ll need to make at least five purchases each calendar month with your Varo debit card and receive at least $1,000 in payroll or government direct deposits to your account.)

You have to opt in to this overdraft protection plan, however — and if you don’t, or you don’t qualify, your transaction will simply be declined at no additional cost to you if you have insufficient funds.

Since Varo doesn’t have physical locations, you’ll be able to manage your money through its digital app as well as having access to a network of more than 55,000 Allpoint ATMs.

Depositing cash is a little hairy, however; you’ll need to do so at a participating Green Dot retailer, such as CVS, Walmart, or Walgreens, and these locations do charge a fee of up to $4.95 for the transaction.

However, the Green Dot fee — or the $2.50 fee you’ll pay if you make a withdrawal from an out-of-network ATM — are just about the only costs you’ll have to worry about when it comes to Varo. There are no foreign transaction fees or fees to replace a lost or stolen debit card.

Varo also offers early direct deposit, which may give you access to your paycheck funds up to two days earlier than you’d otherwise get them.

Savings

Grade: A+

Along with its online checking account, Varo also offers an online savings account — and a very attractive one, given its high APY rates.

Simply by opening an account, you’ll earn 1.21% APY (compared to a national average of just 0.06%, according to the FDIC).

And if you meet Varo’s requirements, your rate will skyrocket to 2.80%:

Make at least five debit purchases per calendar month Receive at least $1,000 in direct deposits per calendar month Keep your daily Savings Account balance at or below $10,000.

Yes, that’s a maximum balance, not a minimum balance — and no matter how much money you keep in your online savings account, there’s no monthly fee.

Varo also offers two automatic savings tools to help you build a cushion without really thinking about it.

Save Your Pay allows you to set aside a percentage of each direct deposit you receive and automatically transfers it to your savings account.

Save Your Change is Varo’s round-up program, which rounds each transaction you make up to the nearest dollar and transfers the change to your savings account.

Given that the money in your Varo accounts is FDIC insured up to the $250,000 maximum, we can find just about zero faults with this savings program.

Convenience

Grade: B+

Although online-only banks do, by definition, lack the convenience of physical locations, Varo offers a live, U.S.-based customer service hotline that’s available seven days a week. You can also send an email if you’d rather avoid the phone.

However, Varo does get a bit of a ding for its lack of free or easy cash deposits.

And while its network ATMs offers good U.S. coverage, in-network international ATMs are limited to only the following countries:

Canada The United Kingdom Puerto Rico Mexico Australia

Mobile Banking

Grade: A

Varo’s app enjoys high ratings from both Apple and Android users: 4.6 stars on the Google Play store, with more than 21,000 reviews, and 4.8 stars on the App Store with almost 45,000 reviewers.

The app gives you an easy bird’s-eye view of your bank account and plays well with Google and Apple Pay. Varo’s app also features an “offers” tab which may help you find deals and services, and even jobs that could help you earn and save money. (Keep in mind, though, that these offers are from Varo’s partners, so the company will make some money if you take them.)

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Account Fees

Given how few fees Varo charges, many of its customers wonder how it turns a profit.

The only fee Vary takes from its customers is a $2.50 charge for out-of-network ATM withdrawals — though, as stated above, you may be on the hook for third-party charges to make cash deposits at Green Dot locations.

Varo also earns money through partner offers, as well as through debit card transaction fees paid by the merchant. (In other words, in ways that don’t affect you at all!)

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Varo Bank Customer Service

Varo’s customer service is available via phone or email.

Phone: 1-800-827-6526 available Friday, 8 a.m. to 9 p.m. ET and Saturday – Sunday, 11 a.m. to 7 p.m. ET, Email: help@varomoney.com

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Is Varo Right for You?

Varo Bank is a convenient and low-cost alternative to a major, sticks-and-bricks bank that may charge a rash of fees in return for their services. However, it’s not the right alternative for everyone.

Varo might be a good fit if you:

Receive your paychecks mostly in the form of direct deposits. Find yourself frequently hit by frustrating bank fees that you’d rather avoid. Would like to earn a significant interest rate on your savings account without paying monthly fees. Have a fairly minimalistic approach to your finances and aren’t looking for a bank that can offer extras like credit cards, loans, etc. Travel frequently, but only to the countries listed above where Varo offers in-network ATMs. Are interested in learning more about Varo’s partner offers, which could help you earn and save money as well as build your credit.

On the other hand, Varo might not be the best fit if you:

Work for tips or otherwise deal with a lot of cash. Need small business banking or other peripheral financial products. Travel frequently outside of the above-listed countries. Keep more than $10,000 in savings.

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Our Bank Review Methodology

The Penny Hoarder’s editorial team considers more than 25 factors in its bank account reviews, including fees, minimum daily balance requirements, APYs, overdraft charges, ATM access, number of physical locations, customer service support access and mobile features.

To determine how we weigh each factor, The Penny Hoarder surveyed 1,500 people to find out what banking features matter most to you.

For example, we give top grades to banks that have low fees because our survey showed that this is the No. 1 thing you look for in a bank. Because more than 70% of you said you visited a physical bank branch last year, we consider the number of brick-and-mortar locations. But more than one-third of you use mobile apps for more than 75% of your banking, so digital features are also considered carefully.

Ratings are assigned across the following categories:

Personal checking accounts Personal savings accounts Small-business banking Convenience Mobile banking

Credit card and loan products are not currently considered.

Jamie Cattanach is a full-time freelance writer whose work has been featured at Fodor’s, Yahoo, SELF, The Huffington Post, The Motley Fool and other outlets. Learn more at www.jamiecattanach.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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