IPO-bound Chime hopes to boost growth by paying higher interest rates

Summary

As it gears up to go public, Chime is going all in on new features in an effort to attract more customers. The digital bank is offering customers who agree to have their paychecks directly deposited into a Chime savings or checking account an APY of 3.75%, it tells TechCrunch exclusively. For those who don’t choose to direct deposit, the interest rate of 2% for standard users is still competitive. By comparison, the national average savings account yield is 0.61% APY, according to Bankrate’s survey of institutions as of the week of March 24. While Chime Chief Product Officer Madhu Muthukumar didn’t say it outright, the move appears to be one at least in part aimed at attracting more stickiness among customers. As of last summer, Chime had 7 million customers and $1.5 billion in annualized revenue, according to reporting by Forbes. The company declined to provide updated figures. In December, Chime filed confidential paperwork to go public with the U.S. Securities and Exchange Commission. Chime was last valued at $25 billion when it raised $1 billion at the height of the valuation frenzy of 2021, and has raised $2.65 billion total, PitchBook estimates. Its investors include Forerunner Ventures, Menlo Ventures, Crosslink Capital, Sequoia, SoftBank, Tiger Global, and many others. The company also declined to comment on potential IPO timing. Premium membership required To be eligible for the 3.7% APY, Chime customers must agree to become members of Chime+, a premium membership tier that requires the agreement to direct deposit their paychecks. There is no charge to join as a premium member. Founded in 2012, Chime markets itself as the bank alternative for everyday Americans. It touts that it doesn’t charge overdraft, maintenance, or low balance fees or require account minimums. “These are people who you would find in your community, whether they make a coffee in your local store, teach your children, deliver a package, or help you find something in your big box retailer...