Neobank.

In plain English

A neobank is a financial technology company that gives you a checking-style account, a debit card, and an app, but it is not a chartered bank itself. Instead, it partners with a federally insured bank that actually holds your deposits, which is how your money can be FDIC-insured. Neobanks tend to win on low fees, no minimums, and a clean app, and lose on cash deposits, branch service, and the breadth of products a full bank offers. Because the deposit insurance comes from the partner bank, it is worth confirming which bank holds your money and that it is FDIC-insured.

01Why it matters

Neobanks can save you real money on fees, but the FDIC insurance flows through a partner bank, so knowing who actually holds your cash protects you if the app company runs into trouble.

02The math, step by step

You open an account with an app-only neobank that charges no monthly fee and no overdraft fee. Behind the scenes, your deposits sit at a partner bank that is FDIC-insured up to 250,000 dollars per depositor, per insured bank, per ownership category. If you want to deposit cash, you may have to use a retail store's cash-load service, since the neobank has no branches.

03What this is NOT

04Receipts

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