How Does Chime SpotMe Work?

Chime shows a glimpse of what banking could be in the future. The fact that they have no physical branches and still manage to serve more than 12 million people as of 2021 is quite impressive. 

As the company keeps growing they are introducing new features that make banking with them easier and one of them is SpotMe.

How does SpotMe Work? Chime SpotMe works by allowing members to overdraw up to $200. Unlike most banks which charge clients for overdrafting their accounts, Chime SpotMe lends you the extra money with no overdraft fees.

Chime SpotMe

Since its launch in 2013, Chime has gradually broken into the banking market by offering some unique features that give the service competitive advantage. Even without a physical location, Chime is quickly growing in terms of account holders and is predicted to have more than 22.7 million account holders by 2025.

Chime SpotMe and How it Works 

Let’s say your spending account has $40 and while in the process of purchasing items at the mall, your total amounts to $50. If you proceed to pay using the Chime debit card, they will allow you to overdraft your account by up to $200. This is how the Chime SpotMe service works. It is somewhat similar to overdraft protection but without the fees charged. However, it is not automatic for users and Chime member need to sign up for the service. 

Furthermore, SpotMe is only available to eligible members and is completely free. So, what makes SpotMe stand out. In the case of other banks, the above overdraft situation would result in the bank charging you overdraft fees. These fees can be about $35 which is a lot more compared to the $10 you over drafted in the above example. 

Then, when you deposit money into the account for example through check, the amount will first pay the negative balance and the remaining will be your account balance. 

SpotMe only covers purchases made by the debit card. This does not include; Atm withdrawals, friend transfers, ACH transfers or chime check transactions. In addition, Chime does not have a limit on the number of times you can overdraft. 

How to Sign Up for SpotMe

SpotMe is optional and if you are eligible customer it is worth signing up for. The process to do that only involves these two steps. 

  • Confirm you have the latest version of the app 
  • Open settings in chime app to confirm you are eligible 
  • Agree to the terms and conditions and you will be officially enrolled. 

Eligibility and SpotMe Limit

To become eligible for SpotMe you need to have received at least $500 in direct deposits within the preceding 31 days. Your SpotMe Limit can increase depending on various factors such as; 

  • Chime account history 
  • Spending activity
  • Direct deposit frequency
  • Risk based factors 

Your limit can also change at Chime’s discretion but you will be notified if such a change occurs. Users have control over their SpotMe limit. You can adjust it according to your preference within your limit. Just open chime app, scroll to the home feed and tap settings click on the adjust button. 

Can you increase your Limit? Yes. Your limit can automatically increases over time if your deposits continue. A great way of encouraging an increase is by increasing the amounts of your direct deposits. When your limit increases, they will notify you via email and the Chime App. Note that the limit increase is automatic and you cannot get it increased by contacting them. 

How SpotMe Differs from Normal Overdraft Protection

Many banks have overdraft protection as a feature which like SpotMe allows users to complete transactions that exceed the balance in their checking accounts. However, SpotMe is different from the traditional overdraft protection in various ways. 

First, you don’t pay overdraft fees with SpotMe but with overdraft protection you will pay a fee of about $35 for each overdraft. The latter also has more possible fees such as transfer coverage amount and annual fees for overdraft line of credit. 

Overdraft amounts also differ. With overdraft protection you can overdraft up to about $10,000 but with SpotMe the limit is about $200 depending on your approval limit. Banks also impose a limit on how many overdrafts you can have which is 7 overdraft fees or about $259 daily. With SpotMe you can have unlimited overdrafts as long as you remain within the SpotMe limit for that month. 

Then, SpotMe does not require a second linked account to overdraft unlike Overdraft protection where it is mandatory unless the client has an overdraft line of credit. 

When it comes to the types of overdraft you can make, SpotMe is limited to Debit card purchases. With traditional overdraft protection, you can make any transaction exceeding the balance in your checking account. 

Finally, the payment terms also differ. With SpotMe, funds are deducted the next time you receive direct deposit with no extra fees to worry about. However, with overdraft protection you will need to settle the amount immediately or risk incurring a $35 fee every 5 days that the amount remains unpaid. 

Key Takeaways 

Overdrafts are something you cannot always prevent. Sometimes they might occur unintentionally with as little as 1$ or even $5. Having a tool such as SpotMe can help minimize the impact without worry of being penalized. The service gives you some breathing room to pay without being worried about the overdraft fees. 

Choosing whether apply for SpotMe comes down to personal preference. If you feel you might need it someday then you should sign up and the fact that it’s free means there’s nothing to lose. 

Chime is currently the top Neobank in the U.S and as their customer numbers will keep growing in the coming years. With SpotMe and other products on top of their lack of fees for transactions, customers are likely to start considering branchless banking.