FinTech News
Varo Bank Increases Limit for Its Varo Advance Feature
With the holiday shopping season now underway, Varo Bank is giving customers a way to access more cash instantly.
About Varo Advance and the update:
Varo has announced that it’s increasing the maximum borrowable amount for its Varo Advance feature. Now, customers can access up to $500 using the service. Not only is this new limit double the previous max of $250 but is also five times the limit the Advance feature had when it first launched in 2020. However, customers will need to work up to the new $500 limit over time, while $250 will be the initial limit.
With Varo Advance, customers can request instant access to funds. In order to be eligible for the service, customers need to receive at least $800 a month in qualifying direct deposits to their Varo account. Fees for Advance vary by the amount and range from $1.60 (for a $20 Advance) to $40 per use. For example, a $250 Advance currently charges a fee of $20. Loans must also be paid back within 30 days, although customers can pay them off early with no penalty.
Other Varo news:
This update to Varo Advance comes as Varo Bank has continually expanded its platform since gaining a national bank charter in 2020. In September, the bank introduced its Varo to Anyone feature, allowing customers to easily send funds to friends and family. To do so, users just needed to provide the person’s phone number or email while the recipient would provide a debit card number in order to claim their funds. Similarly, one year ago, Varo added support for Zelle — the popular peer-to-peer payment service that connects numerous financial institutions.
What they’re saying:
Announcing the newly-doubled limit, Varo Bank found and CEO Colin Walsh stated, “We have increased the maximum limit for Varo Advance because our customers living paycheck-to-paycheck have asked for a way to pay for increased living costs without going into costly debt. Varo Advance can act as a lifeline to cover their short term cash flow gaps at a low cost, which we hope will be particularly helpful at holiday time.”
My thoughts:
Personally, I’m a bit torn on this update to Varo Advance. On the one hand, the $40 fee (for a $500 short-term loan) is likely better than what some other options might cost. Still, though, the fee amounts to 8% of the loan. Additionally, while it makes some sense that users would need to “work their way up” to the higher limit, this also means that they’ll need to borrow from Varo multiple times — which only means more fees.
All things considered, I am glad that those who might need a quick access to a small loan do have Varo Advance as an option, but hopefully it’s not something that consumers are using too often.
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