Varo Money Inc., a San Francisco-based mobile banking app, announced that its checking accounts will include no-fee overdraft options for customers that meet certain conditions. 

Varo is allowing customers to overdraft their accounts up to $50 if they use direct deposit for payroll or government checks of $1,000 or more per month. Customers must also make at least five debit card purchases per month.

Varo CEO Colin Walsh pointed out that financial institutions generated more than $34.5 billion in 2018, with the vast majority of customers not being able to afford the charges. 

"We understand that having a safety net to pay bills and stretching a paycheck is important," Walsh said in a company release. "We built a way for people to do that safely without having to tap credit cards."

The company commissioned a study by a firm called Qualtrics, which shows that four of every 10 millennials overdrew their accounts in 2018, with 41% of those surveyed paying more than $100 in fees last year. 

A 2018 study from Varo showed that six of 10 people in the same age group didn’t have $500 in emergency savings in the bank. 

Varo earlier this year announced an APY of 2.8%, claiming it was the highest savings rate in the industry.

Image courtesy of Varo Money.