US-based mobile bank Varo Money has introduced a new service that enables customers to overdraft their bank account balance up to $50.
Clled No Fee Overdraft, the service will carry no fee or interest.
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Customers are required to make a minimum of five debit card purchases per month and receive payroll or government direct deposits of at least $1,000 each calendar month into their Varo Bank Account, to be eligible for the service.
The move is aimed to provide the Americans access to a fee-free safety net.
Varo Money CEO Colin Walsh said: “Financial institutions earned $34.5bn from overdraft fees alone last year and the vast majority of overdraft fee revenue came from customers who can least afford it.
“Paying for a tank of gas to get to work could cost you a fee of $35 if you’re running a few dollars short just before payday.
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By GlobalData“We understand that having a safety net to pay bills and stretching a paycheck is important. We built a way for people to do that safely without having to tap credit cards.”
The No Fee Overdraft complements Varo’s existing service portfolio, which includes bank accounts with no monthly fees and high-yield savings accounts with no minimum balance requirement.
Its services also include automated savings tools and early direct deposit.
In April this year, Varo Money tapped NICE Actimize to bolster its anti-money laundering controls.
