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Chime is a nontraditional technology company offering access to basic services like checking, savings and credit accounts. The Chime Credit Builder Card* advertises a path to build a healthy credit history—a similar claim other secured cards share. Cardholders must make a deposit to the secured card in order to set a credit limit and can then make everyday purchases. Chime is a financial technology company, not a bank. Banking services provided by, and debit card issued by, The Bancorp Bank or Stride Bank, NA; Members of the FDIC.
Chime’s Visa Secured card stands out for a few reasons.
1. Prospective Cardholders Must Sign Up for a Chime Spending Account First
Prospective cardholders must be willing to open a Spending Account, Chime’s free checking account that has no minimum balance and no overdraft fees. Setting up direct deposit from an employer, payroll provider or other benefits provider is required in order to qualify for a Credit Builder secured account.
Once the Spending Account receives a direct deposit of at least $200 within the last 365 days of your application, a Chime customer can apply for a Credit Builder secured account and receive a Visa credit card with no credit check or minimum deposit required. Then the cardholder can start transferring any amount of money from their Spending Account into their secured account.
Making transfers online or with Chime’s mobile app offers a relatively straightforward way to go about this. Cardholders can set up Move My Pay, which will automatically transfer a selected amount from the Spending Account to the secured account every time the cardholder gets paid.
Note that bank-to-bank ACH deposits and peer-to-peer payments using apps like Venmo and Cash App don’t qualify as eligible direct deposits.
2. Chime Doesn’t Run Credit Checks for Approval
Chime lists its mission as affording everyone the opportunity to build great credit in a volatile market. Chime doesn’t require a credit check to be approved and thus no minimum credit score is required.
Chime’s Visa secured card encourages, perhaps indirectly, applications from those with bad credit or too many recent rejections from multiple credit card applications. Several hard credit checks done in a short period of time can hurt a credit score and negatively impact borrower approval rates.
3. Chime Doesn’t Charge Fees for Using Credit Builder, Doesn’t Offer Rewards
Like some credit builder cards, Chime doesn’t charge annual, international or maintenance fees. Unlike most credit cards Chime also doesn’t charge cardholders any interest on purchases. This could be a huge perk for cardholders hoping to get a break from paying high interest fees.
Cardholders won’t benefit from any rewards or welcome bonuses common with other credit cards. Chime doesn’t offer benefits like cash back, points or promotional cash deposits. If rewards or bonuses are more important than having no interest, Chime isn’t the best option.
4. It’s Not a Typical Secured Credit Card
Secured credit cards usually require a minimum deposit of a few hundred dollars to open an account. The deposit becomes the card’s credit limit that the cardholder uses to make purchases. Secured deposits aren’t accessible to the cardholder until the entire balance is paid off and the account is closed.
Chime is different. Cardholders don’t have to make a minimum security deposit to open an account. They can transfer money into their secured account at any time. Each transfer becomes part of the spending limit for the month. At the end of the billing cycle, the money transferred is used to cover all the purchases. Cardholders can budget and keep track of how much they spend, but it can get out of control if the cardholder frequently transfers money over to make up for large purchases.
5. Chime Can Help Build Credit History, but It’s Not for Everyone
Chime reports account activity to all three credit bureaus. Cardholders looking to build better credit can establish on-time payment behavior and lengthen a credit history. (Note that late payments can still negatively affect a credit score.)
Chime’s unique account design means cardholders don’t have a pre-set credit limit. The money available to spend depends on how much cardholders transfer into their Credit Builder accounts. Chime doesn’t report credit utilization to credit bureaus at all, so worrying about only spending 30% of the available credit or less won’t be a concern. This is good news for cardholders who have a habit of overspending close to a credit limit or cardholders who don’t want more cash in their Credit Builder account than they need to spend that month.
Because Chime is so unique, cardholders new to credit cards may have to re-learn how to budget credit card spending when moving on to a different card. Most credit cards have high interest rates that accrue if the balance isn’t paid off every month. Cardholders have to be mindful of credit utilization, which can have a large impact on credit scores.
Chime’s Credit Builder Visa secured card may be a good option for cardholders who need to rebuild bad credit or start building credit history from scratch. There’s $0 annual fee and no interest charges on any purchases. Chime doesn’t have a minimum credit score requirement—in fact, the company doesn’t run credit checks at all.
Similar to other secured credit cards, cardholders set credit limits by depositing (or using a direct deposit to add funds) to a Credit Builder account. However, cardholders must open up a Chime Spending Account and set up direct deposit before applying for the Credit Builder Visa credit card.
On-time payments and easy budgeting with Chime’s mobile app will help beginners start building credit history, but they should make sure to research how regular credit cards work once ready to move on.