5 Things You Need To Know About The Chime Credit Builder Visa Secured Credit Card – Forbes Advisor

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Chime is a non-traditional technology company offering access to basic services such as checks, savings and credit bills. The Chime Builder credit card* advertises a path to building a sound credit history — a similar claim is shared by other secured cards. Cardholders must make a deposit to the insured card to set a credit limit and then be able to make daily 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. FDIC members.

Chime Visa Secured card stands out for a few reasons.

Candidate cardholders must first register for a Chime expense account

Prospective cardholders should be willing to open an expense account, the free Chime checking account with no minimum balance and overdraft fees. You need to create a direct deposit from an employer, payroll provider or other benefit provider in order to qualify for a secure Credit Builder account.

Once your Expenditure Account receives a direct deposit of at least $ 200 within the last 365 days of your request, a Chime customer can apply for a Credit Builder insurance account and receive a Visa credit card with no credit check or minimum deposit required. The cardholder can then start transferring any amount of money from his / her expense account to his / her secure account.

Making transfers online or with Chime’s mobile app offers a relatively simple way to do this. Cardholders can set up Move My Pay, which will automatically transfer a selected amount from the expense account to the insured account each time the cardholder is paid.

Please note that bank-to-bank ACH deposits and peer-to-peer payments using applications such as Venmo and Cash App do not qualify as eligible direct deposits.

2. Chime does not carry out credit checks for approval

Chime lists its mission as providing everyone with the opportunity to build great credit in a volatile market. Chime does not require credit approval and therefore does not require a minimum credit score.

Chime Secure Visa Card encourages, perhaps indirectly, applications from people with bad credit or too many recent rejections from many credit card applications. Several harsh credit checks made in a short period of time can damage the credit score and negatively affect the borrowers’ approval rates.

3. Chime does not charge fees for using Credit Builder, it does not offer rewards

Like some credit cards, Chime does not charge annual, international charges or maintenance fees. Unlike most credit cards, Chime also does not charge cardholders any shopping interest. This could be a huge advantage for cardholders hoping to take a break from paying high interest rates.

Cardholders will not benefit from any rewards or welcome bonuses shared with other credit cards. Chime does not offer benefits such as cash back, points or promotional cash deposits. If rewards or bonuses are more important than not having any interest, Chime is not the best choice.

4. It is not a standard secure credit card

Secure credit cards usually require a minimum deposit of a few hundred dollars to open an account. The deposit becomes the credit limit of the card used by the cardholder to make purchases. Secured deposits are not accessible to the cardholder until the full balance has been paid and the account has been closed.

Chime is different. Cardholders do not need to make a minimum security deposit to open an account. They can transfer money to their secure account at any time. Each transfer becomes part of the monthly spending limit. At the end of the billing cycle, the money transferred is used to cover all purchases. Cardholders can budget and keep track of how much they spend, but it can get out of hand if the cardholder frequently carries money to make big purchases.

5. Chime can help build credit, but it’s not for everyone

Chime reports account activity to all three credit bureaus. Cardholders who want to create better credit can create timely payment behavior and extend their credit history. (Keep in mind that late payments can negatively affect your credit score.)

Chime’s unique account design means that cardholders do not have a predefined credit line. The amount of money available for spending depends on how much the cardholders transfer to their Credit Builder accounts. Chime does not mention the use of credit by credit bureaus at all, so worrying about spending only 30% of the available credit or less will not bother you. This is good news for cardholders who tend to spend too close to a credit line or for cardholders who do not want more cash in their Credit Builder account than they need to spend this month.

Because Chime is so unique, cardholders who are new to credit cards may need to re-learn their credit card spending budget when moving to a different card. Most credit cards have high interest rates that accrue if the balance is not repaid each month. Cardholders should be careful about the use of credit, which can have a major impact on credit scores.

Conclusion

Chime’s Credit Builder Visa Secure Card can be a good choice for cardholders who need to rebuild bad credit or start a new credit history. There is an annual charge of $ 0 and there is no interest for any purchases. Chime has no minimum credit score requirement — in fact, the company does not carry out any credit checks.

Similar to other secure credit cards, cardholders set credit limits by depositing (or using direct deposit to add money) to a Credit Builder account. However, cardholders must open a Chime Spending account and create a direct deposit before applying for a Credit Builder Visa credit card.

Timely payments and an easy budget with the Chime mobile app will help beginners start building up their credit history, but they should take care to research how regular credit cards work when they are ready to go.

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