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Updated on Wednesday, December 11, 2019
Cleo is a budgeting app that serves as a sassy Siri for your finances. The app is a “chatbot,” which you interact with via text messages. Cleo makes a budget for you, helps you build savings and talks to you about your spending habits and your financial life. It also offers a digital wallet account for saving funds, and a form of overdraft protection.
While Cleo’s chatty approach to your finances make it stand out from competitors, its digital wallet product raises some red flags for us: The wallet pays no interest, and does not carry Federal Deposit Insurance Corp. (FDIC) insurance. If you’re serious about saving money, you need to understand the downsides to Cleo’s core features before using this app.
What is the Cleo app?
Cleo is designed to help you make a budget and stick to it. You connect your checking account to the app, which scans your transactions and analyzes your financial habits. Cleo spots spending trends and provides advice — sometimes brutally honest advice — about how you should be spending or saving your cash.
The chatbot functions of Cleo are central to how it works: You link your Facebook account to the Cleo app, which then chats with you via Facebook Messenger about your finances. You can ask Cleo for updates on your account balances, tell the app to build you a budget or have it set up reminders to reel in the spending on certain categories.
For instance, Cleo will tell you your spending by category, date or merchant. You can ask Cleo a question like, “How much did I spend on Uber this month?” or “Can I afford takeout tonight?” and the app will provide you with instant answers.
Cleo is headquartered in the U.K., and the company says it’s compatible with more than 3,000 U.S. financial institutions, including big banks like Chase, Wells Fargo, Bank of America and Capital One.
Cleo’s free features
Cleo offers two account tiers, a free account and a $5.99 per month account called Cleo Plus. The free account gives you access to Cleo’s budgeting tool and digital wallet, plus a weekly quiz with chances to earn cash rewards. The paid account adds in cashback rewards and overdraft protection.
Cleo budget tools
Cleo analyzes your finances and suggests a budget. It lets you adjust the budget plan to meet your needs. You must link Cleo to your checking account, although Cleo does not specify whether it can support more than one bank account. The app will identify recurring bills and send you reminders to pay them. The app only lets you set one budget — unlike some other budget apps that allow you to create different budgets for different categories. Cleo categorizes your spending patterns and provides regular summaries by category.
Cleo digital wallet
Cleo’s digital wallet lets you stash money in the account, but it does not pay an APY and does not offer FDIC insurance. The app prompts you set up recurring, automatic deposits into the wallet, and also lets you move money into this account on demand.
Note the company goes out of its way to remind users that this is not a savings account. Not being able to earn interest should be a deal breaker if you’re looking to seriously grow your savings — there are a number of high-yielding, online savings accounts that reward you with interest rates climbing over 2%.
The company states that in the U.K., funds stashed in Cleo’s digital wallet are held by U.K. banks Barclays and MangoPay. It is not clear which institution holds your wallet funds in the U.S.
When it comes to deposit insurance, Cleo “pledges” up to $250,000 in protection, although the terms of this pledge are not anything like the deposit insurance offered by the FDIC. Cleo says “… [the] pledge provides protection for up to $250,000 in losses to U.S. bank accounts and credit cards where the losses are attributable to sign-up and use of Cleo.”
Cleo weekly quiz
Every week, you can participate in a quiz with questions about your own recent spending and savings habits. If you get all the answers right, you’ll be entered to win a cash prize.
Cleo Plus paid features
For $5.99 per month you get Cleo Plus, an upgraded version of the app with the features above plus Cleo Cover, a form of overdraft protection, and Daily Cash, a cashback rewards program.
Cleo Cover lets you borrow up to $100 if you need a bit cash to get by or if your checking account is in danger of going into the red. No interest is charged on the loan amount, so long as you repay what you borrowed within three to 28 days later. Cleo determines your eligibility for Cleo Cover on a case-by-case basis, based on factors like your spending habits and whether you have regular income.
Cleo Cover comes with a major caveat, though: To get your Cover payment on the same day, Cleo will charge you a $3.99 fee. If you’re needing Cleo to spot you cash or cover an overdraft, chances are you need the money immediately.
Daily Cash provides cashback rewards on purchases you make from certain retailers. The app shows you the retailers you shop at most — and each time you make a purchase at one of those retailers, you’ll get up to 7% of your purchase deposited back into your Cleo Wallet. Other ways you can get cashback are shopping on the Daily Cash page in the app, and by completing challenges, like sticking to your budget or using the app frequently.
Advantages of Cleo
- The app’s nonchalant, sometimes snarky tone makes managing your money a little less intimidating and a bit more fun.
- Cleo provides a fast, convenient way to figure out if you can afford a certain purchase. Instead of sitting down and analyzing your budget, simply ask Cleo if you can afford it.
- Cleo Plus’s added features — Cleo Cash and the cashback rewards program — could be useful for some users, if you understand the costs involved.
Downsides of Cleo
- You don’t earn an APY on savings stashed in your Cleo Wallet. If you’d like to grow your money, these funds should be immediately stashed in a savings account that earns a decent APY.
- Cleo “pledge” to protect up to $250,000 of losses “attributable to sign-up and use of Cleo” is a major red flag. This is not FDIC deposit insurance, and users should understand that if the company were to go out of business, any funds kept in the Cleo Wallet could be at risk.
- Not being able to set different budgets for different categories — which is a feature of other budgeting apps like Mint — is a drawback.
- It can take up to four days to transfer funds from your bank account to Cleo Wallet, and vice versa. That’s not a short amount of time.
- The chatbot on the Cleo app is not very intuitive. After asking the chatbot several questions about how many bank accounts you’re able to link and whether Cleo Plus offers 2% interest on savings — something that is advertised on a company press release but cannot be found on its website — we received the same slew of auto-responses repeatedly. If you have questions about the app or the funds you have stashed in it, the app provides little to no direction on how to get in touch with an actual Cleo employee.
- Facebook has had its fair share of privacy concerns. Cleo’s integration with Facebook could make you wary. If your Facebook is hacked, it could make your conversations with Cleo vulnerable.
Cleo vs. other budget apps
Cleo offers a little bit of everything that other fintech apps offer: Budgeting, saving, motivation, and cashback. However, Cleo falls short on delivering in each of these categories when compared with its competitors, proving that even if you can do everything, that doesn’t mean that you should.
Cleo vs. Mint
In terms of its budgeting component, Cleo falls short in comparison to Mint in the following ways:
- Cleo’s budgeting tool doesn’t allow you to set up different categories for different transactions, something that Mint does feature.
- In addition to allowing you to set up different categories, Mint lets you customize those categories by renaming them or recategorizing transactions, something that you can’t do with Cleo.
- Mint’s budgeting tool is much more intuitive, and will automatically separate expenses like an ATM withdrawal and an ATM fee, filing those expenses under their designated categories.
- Mint allows you to create custom alerts to notify you when certain bills are due. While Cleo gives you general budget notifications, you cannot set up custom alerts.
Cleo vs. Digit
As for Cleo’s saving money feature, the Digit app does the same thing and arguably does it better:
- Funds in Digit are FDIC-insured, up to the legal limit. Funds in the Cleo Wallet are not insured. That’s a deal breaker when it comes to the savings you’ve worked so hard to build.
- Digit rewards you with a 1% Savings Bonus if you save for three consecutive months.
- Digit allows you to customize particular savings goals, something that Cleo lacks.
Cash back is something you can easily get with credit cards, which often offer cash back for spending done in entire categories, not just at specific retailers.
As for the motivating factor, Cleo does have a leg up on its competitors with its witty “roast me” or “hype me” money management feature — depending on whether you’re in the mood for some tough love or a pep talk.
Is Cleo right for you?
Cleo attempts to make money management more approachable by incorporating a chatbot with attitude and offering games — so if you’d rather get a root canal than craft a budget, it could be tempting to check out.
Your finances, though, are anything but a game. Cleo offers no interest, no FDIC insurance, potentially high costs on Cleo Cover loans and a bare-bones budgeting tool. The chatbot’s jokes can’t compete with a detailed budgeting app like Mint, high-yielding savings accounts offered by online banks and competitive credit card rewards programs. Take your money management seriously, and leave the laughs for other forms of entertainment.