In order to know whether the Chime credit card is suitable for you, you need to understand how it works. And to get to this, you have to read on.
These are the best times ever for people who need to restore their past credit record or build a fresh credit history. There are options aplenty, from old-fashioned secured credit cards to specialized credit union loans.
An alternative option is the Chime Credit Builder Secured Visa Credit Card, which is a debit-credit hybrid card. To determine whether or not the Chime credit card is for you, find out how it works.
Most of the issuers of credit cards are direct lenders. Every time you pay by a card issued by them, they are lending you the money. Chime Financial, with offices in San Francisco, is not a bank but a fintech company.
Chime collaborates with other businesses and banks to provide services. Stride Bank is the issuer of the Chime Credit Builder card, and the Chime checking account that you will use to apply for the credit card is from Bancorp Bank and Stride.
Since Chime also collaborates with Visa, the Chime Credit Builder Secured Visa Credit Card can be used anywhere Visa credit cards are accepted.
How the Chime Credit Builder Card Works
So is Chime a credit card or something? The Chime Credit Builder card is a secured credit card with a twist. Instead of depositing a set amount of money as collateral to the issuer that they get to keep.
Then, until you close the account or it gets turned into an unsecured account, the money in your Chime checking account secures the card. These are the steps to opening the account, which are all done on the Chime website.
- Open a Chime Checking Account: This account has no monthly fee, and you can use it like any other checking account. To qualify for a Chime Credit Builder card, you must have an eligible direct deposit, typically a paycheck of $200 or more, within the last year.
- Choose “Credit Builder.” After opening the checking account, you can enroll in “Credit Builder” and complete the online application.
- Fund your card: Move the amount of money you want to spend using the card from your checking account to your credit builder card account. That is your card’s limit.
You’ll receive a Chime Credit Builder card in the mail. You can use it wherever Visa is accepted (essentially where you can use credit cards).
Then, Chime will automatically pay your monthly fees in full and withdraw the money from your secured account. That way you won’t be able to carry over a balance, as you would with any other type of credit card.
To have money set aside specifically for your card at all times, you can sign up for “Move My Pay,” which automatically moves a sum of your choice from direct deposits into your Chime Credit Builder account.
How the Chime Credit Builder Card Impacts Your Credit
In most instances, when you apply for a credit card, the business will perform a hard credit check in order to determine eligibility. There is no credit check done for a Chime Credit Builder card, though. A hard inquiry will not be placed on your credit report, and it will lower your credit score temporarily.
After you own the card, Chime will report your payment history to the three major credit reporting bureaus, TransUnion, Equifax, and Experian. Since payment history carries the most weight on a FICO score, the more payment history on your report, the better.
What Chime does not do is report your credit utilization to the bureaus. That’s because you’re using your own money and not actually borrowing money from a fixed line of credit. So, you never have to worry about your balance being too near the credit limit, which can damage your credit utilization ratio.
What are the Benefits of the Chime Credit Card?
There are a number of really excellent features of this card, including:
- No extra interest: Since you’re only paying with your own money and paying back what you have spent with money in your checking account, there’s no revolving debt. That means interest isn’t added to anything you buy.
- No annual charges: Unlike some secured cards that are targeted to those who have bad credit or unestablished credit, this card does not have any annual charge.
- No set credit limit: There is no set credit limit on some regular credit cards, but there is none here either. Your spending limit is whatever amount you fund in your credit builder secured account, so you get to decide. Whether you have $200 or $2,000 in your account, that’s your limit.
If you want to make sure that you never end up in high-expense credit card debt while making a purchase, this card is for you. It gives you convenience and safety as you build a credit score.
Bottom Line
If you want a credit card that you can never overdraw or carry high-expense debt with, the Chime Credit Builder card is a great choice.
As you use it, you will be capable of establishing or improving a credit rating, as your on-time payments will be recorded on your credit report.
And when your credit rating is improved, you can choose to apply for an unsecured card with a wide array of useful and helpful features.
