As Chime prepares to launch its initial public offering, the company is introducing new features to attract more customers and expand its user base.

Chime has announced that it will offer an annual percentage yield (APY) of 3.75% to customers who agree to direct deposit their paychecks into a Chime savings or checking account, as reported exclusively to TechCrunch. For customers who do not opt for direct deposit, the standard interest rate remains competitive at 2%.

In 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. This move by Chime appears to be an attempt to increase customer loyalty and retention.

Chime’s Chief Product Officer, Madhu Muthukumar, did not explicitly state the reasoning behind the new feature, but the company’s efforts to attract and retain customers are evident. With 7 million customers and $1.5 billion in annualized revenue as of last summer, according to Forbes, Chime is positioning itself for continued growth.

In December, Chime filed confidential paperwork with the U.S. Securities and Exchange Commission to go public. The company’s valuation was last reported at $25 billion in 2021, with a total of $2.65 billion raised from investors, including Forerunner Ventures, Menlo Ventures, and Sequoia, among others.

Chime declined to comment on the potential timing of its IPO.

Premium Membership Requirements

To be eligible for the 3.75% APY, customers must become members of Chime+, a premium membership tier that requires direct deposit of paychecks. Membership is free, and there are no associated fees.

Founded in 2012, Chime positions itself as an alternative to traditional banking for everyday Americans, with no overdraft, maintenance, or low-balance fees, and no minimum account requirements.

According to Muthukumar, Chime’s customer base is comprised of individuals who are “gainfully employed” and tend to be in their 30s, with a slight skew towards female customers. “These are the people you would find in your community,” he said.

In 2020, Chime introduced a credit card designed to help users build and improve their credit. The company has since expanded its offerings, including a redesigned app, exclusive discounts, cashback offers, and dedicated customer support.

On March 21, Chime announced the launch of “instant loans”, further expanding its range of financial services. The move is part of a broader trend in the financial technology industry, with companies competing to offer innovative and attractive services to customers.

For example, Robinhood recently announced that it would begin offering wealth management and private banking services to retail investors, including a 4% APY on savings, estate planning, and tax assistance. The company also offers unique features such as cash delivery to users’ doorsteps.