Varo is Leading the Movement to Help People Save Money

“I have actually been making better financial choices since I got Varo.”

By Colin Walsh

Forget acronyms like YOLO or FOMO. What’s the term to explain the bad feeling of not being able to cover a surprise bill — or do something you want — because you don’t have the money saved?

Too many Americans — and people under 40 especially — don’t have $500 in cash savings. While there are a lot of underlying reasons for this, there’s one that is totally inexcusable: many big banks have not helped people save. In fact, many institutions have pushed people away from savings with their fees, minimum balance requirements, and low rates.

At Varo, we are working to fix that. As in varo (noun), the good feeling you get when you save enough money to sleep at night and do the things you want.

We are creating a better way to save, starting with our FDIC-insured Varo Savings Account. Make sure to check out all that it offers. To design a more effective savings account, we also added automation and removed fees and minimum balance requirements — all to help our customers save more easily for their future goals.

We know people are eager to put money aside — even if it’s only $20 here and there. Recently, I got a note from a recent college grad who told me she wants to grow her money for the long term and switched banks just to save at Varo. In fact, three out of four of Varo savers with money in their account are using one of our automatic savings tools.

If people want to save, then how did we lose our way? Among the many reasons, banks have trained people to not care about savings — and worse, they have made people feel really bad about their money. Fee rage is real; we’ve all been there.

For example, today all 10 of the largest banks in the United States charge overdraft fees that are $30 and higher, according to a report from the Center for Responsible Lending. And those fees are large percentages of their overall service-charge income, so they are not going away any time soon.

Those same 10 banks offer an average 0.12% APY and many of those accounts have minimum balance requirements and/or fees. Even during times of rising interest rates, many large banks have been slow to increase the APY they pay customers on savings — they’ve focused on increasing profit margins instead.

While one company alone can’t solve a national problem, at Varo we’re putting a stake in the ground. We can signal to the industry that things need to happen differently and the customer and their financial health need to come first. Americans deserve to have a place for their money that’s not only safe, but guaranteed to grow meaningfully, and where they can feel good about what’s happening.

That’s where new technology can fill in some of the gaps. Automation can build a savings habit — where on a daily, weekly, or monthly basis we are putting aside some of our paychecks for a rainy day or a longer-term goal like buying a house or paying for education. Algorithms can provide a forecast so that you can see if you will have any left over money your account at the end of the month.

Those are foundational tools at Varo. We’re on both iOS and Android, so everyone with a smartphone, no matter their net worth, can access us.

Another customer told us recently, “I have actually been making better financial choices since I got Varo.”

In the past few years, we’ve seen a lot of innovation around helping Americans get into investing. App-based platforms have killed trading fees or offer fractional shares of expensive single stocks.

But the truth is investing isn’t always the right solution. Many people can’t afford to take on risk, don’t have time to follow the market, or don’t want to pay a management fee.

When I started Varo in 2015, I had a singular vision in mind: to create a banking institution that worked FOR customers instead of against them. Varo’s social mission is to help Americans save more money. We don’t charge fees for banking services at Varo because you shouldn’t have to pay money to use your own money. You should just earn money, with no risks or gotchas, when you enlist a bank to hold your money for you. This is the basis of trust in our relationship with our customers — and the way everyone can build their savings.