Chime is an unconventional technology firm that provides access to essential services such as checking, savings, and credit accounts. The Chime Credit Builder Card* promotes a road to building a healthy credit history, which is a claim shared by other secured cards. Cardholders must submit a deposit to the secured card in order to establish a credit limit, after which they may make regular transactions. Chime is not a bank, but rather a financial technology startup. Banking services are supplied by The Bancorp Bank or Stride Bank, N.A., and debit cards are issued by The Bancorp Bank or Stride Bank, N.A., both of which are FDIC members.
Chime’s Visa Secured card is notable for many reasons.
1. Aspiring cardholders must first open a Chime Spending Account
Prospective cardholders must be willing to open a Spending Account, which is Chime’s free checking account with no minimum balance requirement and no overdraft fees. To qualify for a Credit Builder protected account, you must first set up a direct deposit from your employer, payroll provider, or other benefits source.
A Chime client may apply for a Credit Builder secured account and acquire a Visa credit card with no credit check or minimum deposit if the Spending Account receives a direct deposit of at least $200 during the past 365 days of their application. Then the cardholder can start transferring any amount of money from their Spending Account into their secured account.
Making transfers online or using Chime’s mobile app is a reasonably simple method to do this. Cardholders may enable Move My Pay, which will automatically move a predetermined amount from the Spending Account to the safeguarded account whenever the cardholder is paid.
Bank-to-bank ACH deposits and peer-to-peer payments made via applications such as Venmo and Cash App do not qualify as eligible direct deposits.
2. Chime does not do credit checks before to approval
Chime’s mission statement is that it provides everyone with the chance to develop outstanding credit in an unpredictable economy. Chime does not need a credit check in order to be authorized, thus there is no minimum credit score necessary.
Chime’s Visa secured card may indirectly promote applications from persons with weak credit or a history of frequent credit card denials. Performing many rigorous credit checks in a short period of time might harm a credit score and reduce borrower acceptance chances.
3. Chime does not charge fees to use Credit Builder and does not provide rewards
Chime, like some other credit builder cards, has no annual, international, or maintenance fees. In addition, unlike other credit cards, Chime does not charge cardholders interest on purchases. This might be a big benefit for cardholders who want to avoid paying excessive interest costs.
Cardholders will not get any perks or welcome bonuses that are customary with other credit cards. Chime does not provide any perks like cash back, points, or promotional cash deposits. If receiving prizes or bonuses is more essential than not having any interest, Chime isn’t the greatest choice.
4. It’s Not Your Average Secured Credit Card
A few hundred dollars is normally required to create an account with a secured credit card. The deposit is applied to the card’s credit limit, which the cardholder may use to make transactions. Secured deposits are not available to the cardholder until the whole sum has been paid off and the account has been terminated.
Chime is unique. To start an account, cardholders are not required to provide a minimum security deposit. They have the ability to deposit funds into their safeguarded account at any time. Each transfer counts against the monthly expenditure limit. The money transferred is used to cover all purchases at the end of the billing cycle. Cardholders may manage and watch their spending, but it can spiral out of control if the cardholder repeatedly transfers money across to cover major expenditures.
5. Chime Can Assist in Credit History Building, but It Isn’t for Everyone
All three credit bureaus get account activity data from Chime. Cardholders who want to improve their credit may create on-time payment habits and prolong their credit history. (It should be noted that late payments may still have a derogatory mark on a credit score.)
Because of the unique account architecture of Chime, cardholders do not have a pre-set credit limit. The amount of money available for spending is determined by how much cardholders deposit into their Credit Builder accounts. Chime does not disclose credit use to credit agencies, therefore using just 30 percent of available credit or less will not be an issue. This is great news for cards who have a propensity of overspending near their credit limit or who don’t want more money in their Credit Builder account than they need to spend that month.
Because Chime is so distinct, cardholders who are new to credit cards may need to relearn how to manage credit card spending when switching to a different card. Most credit cards charge hefty interest rates if the amount is not paid off in full each month. Cardholders must be aware of their credit use, which may have a significant influence on their credit report.
Chime’s Credit Builder Visa secured card may be a suitable alternative for consumers who need to restore their credit or begin developing their credit history from scratch. There is no yearly fee and no interest on any transactions. Chime does not have a minimum credit score requirement and does not conduct credit checks at all.
Cardholders establish credit limits, like with other secured credit cards, by depositing (or utilizing a direct deposit to add cash) to a Credit Builder account. Before applying for the Credit Builder Visa credit card, customers must first register a Chime Spending Account and set up a direct deposit.
On-time payments and simple budgeting using Chime’s mobile app can assist newcomers to start establishing a credit history, but whenever ready to move on, they should understand how normal credit cards function.