Varo savings accounts have no monthly fees, but the interest rate is low and you cannot withdraw cash at an ATM
Varo is an online bank, which means it has no physical branches. You open an account through an app or website, deposit money by transfer or direct deposit, and move money out the same way. The account itself costs nothing per month — no maintenance fee, no minimum balance requirement, no overdraft fees if you link it to a Varo checking account.
The trade-off is that Varo's savings rate is typically lower than what you would find at other online banks. The rate changes, but it has historically been in the range of 0.40% to 0.50% annual percentage yield (APY). That means on $10,000, you would earn roughly $40 to $50 per year. A competing online bank might offer 4% or higher on the same balance, which would earn $400 or more annually.
You also cannot withdraw cash directly from a Varo savings account. You must transfer money to your Varo checking account first, then withdraw from an ATM or spend it as a debit card transaction. This adds a step if you need physical cash quickly.
Key Takeaways
- Varo savings accounts charge no monthly fee and have no minimum balance, making them free to hold if you do not mind a low interest rate.
- The interest rate on Varo savings is typically lower than rates at other online banks, so you earn less on your money over time.
- You cannot withdraw cash directly from a Varo savings account; you must transfer to checking first or use a debit card.
- Varo savings accounts are FDIC insured up to $250,000, so your money is protected if the bank fails.
- Varo works best if you already use Varo checking and want a simple, fee-free place to hold money without chasing the highest rate.
How Varo's interest rate compares to other online banks
Interest rates on savings accounts move constantly and vary by bank. At any given moment, some online banks offer rates two to four times higher than Varo's. Banks like Marcus, Ally, and American Express Personal Savings have historically offered rates in the 4% to 5% range, while Varo has stayed closer to 0.40% to 0.50%.
The difference compounds over time. On $50,000 saved for one year, a 4.5% rate earns you $2,250. Varo's 0.45% rate earns you $225. That is a gap of $2,025 in a single year. Over five years, the gap widens significantly.
Varo's lower rate may reflect its business model: the bank makes money partly by offering checking accounts with features like early direct deposit and cash advances, so it does not need to compete aggressively on savings rates. If you are using Varo checking anyway, the savings account is a convenient place to park money without paying a fee. If you are opening an account purely to save, a higher-rate bank is the better choice.
What happens when you need to move money out
Varo savings accounts are linked to your Varo checking account by default. To access your savings, you initiate a transfer from savings to checking within the app, which usually completes within one business day. Once the money is in checking, you can withdraw it at an ATM, spend it with your debit card, or send it elsewhere.
This process is free and straightforward if you are already a Varo customer. The delay is minimal — usually overnight. But if you need cash immediately and do not have a Varo ATM nearby, you will need to plan ahead or use a different account.
Varo does not charge transfer fees, and you can move money between savings and checking as often as you want. Federal rules once limited savings transfers to six per month, but those rules were suspended in 2020 and have not been reinstated. Still, Varo's terms allow them to limit transfers if they choose, so check the current rules before relying on frequent moves.
Who should use a Varo savings account
A Varo savings account makes sense if you already have a Varo checking account and want a simple, fee-free way to separate spending money from savings. The lack of monthly fees and minimum balance removes friction — you can open it, leave it alone, and never worry about account maintenance.
It also works if you are saving for a goal that is months or years away and you do not mind a low interest rate. The account is safe (FDIC insured), easy to use, and costs nothing. If the rate is not your priority, the simplicity may be worth it.
A Varo savings account is less appealing if you are trying to maximize the return on a large balance or if you do not already use Varo checking. In those cases, opening an account at a higher-rate bank like Marcus or Ally will earn you significantly more money with the same effort.
FDIC insurance and what it protects
Varo is FDIC insured, which means the Federal Deposit Insurance Corporation guarantees your deposits up to $250,000 per account holder per bank. If Varo fails, the FDIC will reimburse you for the full balance of your savings account, up to that limit.
This protection applies to each account type separately. Your Varo savings account is insured up to $250,000, and your Varo checking account is insured up to $250,000 as a separate account. If you have both and they total $400,000, the FDIC covers all of it.
FDIC insurance does not protect you from fraud, mistakes, or unauthorized transfers. If someone gains access to your account and drains it, you will need to report the fraud to Varo and work with them to recover the money. The bank is required to investigate, but the process takes time.
Fees and charges you should know about
Varo savings accounts have no monthly maintenance fee, no minimum balance fee, and no transfer fee. You will not be charged for moving money between your Varo accounts or for linking an external bank account.
However, if you overdraft your Varo checking account and do not have a linked savings account with funds to cover it, Varo may charge an overdraft fee. The fee structure varies, so check Varo's current terms. If your savings account is linked, Varo can pull from it automatically to cover a checking overdraft, which may avoid the fee entirely.
You also will not earn interest on money sitting in a Varo checking account — only in the savings account. If you leave a large balance in checking, you are missing out on the small amount of interest the savings account would earn.
How to decide if Varo savings is right for you
Start by comparing the current interest rate at Varo to rates at other online banks. Visit the websites of Marcus, Ally, American Express Personal Savings, and a few others, and note their APY. If Varo's rate is significantly lower and you have a substantial balance to save, the higher-rate bank will earn you more money over time.
Next, consider whether you already use Varo checking. If you do, opening a savings account is a low-friction way to organize your money. If you do not, you would be opening two accounts just to save, which adds complexity. In that case, a single savings account at a higher-rate bank is simpler.
Finally, think about how often you need to access your savings. If you are building an emergency fund and might need cash quickly, Varo's one-day transfer time is reasonable. If you are saving for a goal years away and do not need the money soon, the low rate matters less because you are not counting on frequent access anyway.
Frequently Asked Questions
Can I withdraw cash directly from a Varo savings account?
No. You must transfer money from savings to your Varo checking account first, then withdraw from an ATM or spend it as a debit card transaction. The transfer usually takes one business day and costs nothing.
What is the current interest rate on Varo savings?
Varo's rate changes over time and is typically lower than rates at other online banks. Check Varo's website or app for the current APY, then compare it to rates at Marcus, Ally, and American Express Personal Savings to see how it stacks up.
Does Varo savings have a minimum balance?
No. You can open a Varo savings account with any amount and keep it open with a zero balance if you choose. There is no monthly fee regardless of how much money you have in the account.
Is my money safe in a Varo savings account?
Yes. Varo is FDIC insured, so deposits up to $250,000 are protected if the bank fails. This does not protect you from fraud or unauthorized access — report those issues to Varo immediately.
Can I have multiple Varo savings accounts?
Varo typically allows one savings account per customer, though you can have a checking account and a savings account at the same time. Check Varo's current rules if you need more than one savings account for different goals.