5 things to know about the Visa Chime Credit Builder secure credit card – Forbes Advisor

Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.

Chime is a non-traditional technology company providing access to basic banking services such as checking, savings and credit accounts. The builder chime credit card* announces a way to build a healthy credit history, a similar claim shared by other secured cards. Cardholders must make a deposit to the secure card in order to set a credit limit and can then make their daily purchases.

Chime’s Visa Secured card stands out for several reasons.

1. Potential cardholders must first open a Chime spending account

Potential cardholders should be willing to open an expense account, Chime’s free checking account that has no minimum balance or overdraft fees. Setting up a direct deposit with an employer, payroll service provider, or other benefits provider is required to be eligible for a Credit Builder Secure Account.

Once the spending account receives a direct deposit of at least $ 200 in the last 365 days of your request, a Chime customer can apply for a secure Credit Builder account and receive a Visa credit card without a credit check or deposit. minimum required. Then the cardholder can start transferring any amount of money from their spending account to their secure account.

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

Note that ACH bank-to-bank deposits and peer-to-peer payments using apps such as Venmo and Cash App are not considered qualifying direct deposits.

2. Chime does not perform credit checks for approval

Chime says its mission is to offer everyone the opportunity to build up great credit in a volatile market. Chime does not require credit check approval and therefore no minimum credit score is required.

Chime’s secure Visa card encourages, perhaps indirectly, applications from those with bad credit or too many recent rejections of multiple credit card applications. Multiple credit checks done in a short period of time can hurt a credit score and negatively impact borrower approval rates.

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

Like some credit cards, Chime does not charge annual, international, or maintenance fees. Unlike most credit cards, Chime also does not charge cardholders interest on purchases. This could be of huge benefit to cardholders hoping to take a break from paying high interest charges.

Cardholders will not receive any rewards or welcome bonuses common with other credit cards. Chime does not offer any perks such as cash back, points, or promotional cash deposits. If the rewards or bonuses are more important than no interest, Chime is not the best option.

4. This is not your typical secure credit card.

Secured credit cards generally require a minimum deposit of a few hundred dollars to open an account. The deposit becomes the credit limit of the card that the cardholder uses to make purchases. Secure deposits are not accessible to the cardholder until the balance is fully refunded and the account is closed.

The 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 is part of the spending limit for the month. At the end of the billing cycle, the money transferred is used to cover all purchases. Cardholders can budget and track how much they spend, but this can get out of hand if the cardholder frequently transfers money to offset large purchases.

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

Chime reports account activity to the three credit bureaus. Cardholders looking to achieve better credit can establish a payment behavior on time and extend their credit history. (Note that late payments can always negatively affect a credit rating.)

Chime’s unique account design means cardholders don’t have a preset credit limit. The money available to spend depends on how much cardholders transfer to their Credit Builder accounts. Chime doesn’t report credit usage to the credit bureaus at all, so worrying about spending only 30% of available credit or less won’t be a problem. This is good news for cardholders who are used to spending too close to a credit limit or for cardholders who don’t want more money in their Credit Builder account than they do. need it this month.

Because Chime is so unique, cardholders new to credit cards may have to relearn how to budget for credit card spending when they switch to another card. Most credit cards have high interest rates that accumulate if the balance is not paid every month. Cardholders should be mindful of the use of credit, which can have a big impact on credit scores.

Final result

Chime’s Secure Visa Credit Builder card can be a good option for cardholders who need to rebuild bad credit or start building a credit history from scratch. There is a $ 0 annual fee and no interest charge on purchases. Chime has no minimum credit score requirement. In fact, the company does not perform any credit checks.

Like other secured credit cards, cardholders set credit limits by depositing (or using direct deposit to add funds) to a Credit Builder account. However, cardholders must open a Chime spending account and set up direct deposit before applying for the Visa Credit Builder credit card.

On-time payments and easy budgeting with Chime’s mobile app will help newbies start building a credit history, but they should be sure to research how regular credit cards work when they’re ready to move on. .

James V. Hayes