Chime Credit Card | How Chime Credit Builder Works (Review)
Chime Credit Card | How Chime Credit Builder Works (Review). This article covers all you need to know about chime credit cards. All the guides you need to navigate the Chime Credit Builder, its pros and cons. This article equally answers popular questions on Chime Credit Builder.
About Chime Credit Builder
The Chime Credit Builder is a secured credit card that’s intended to help people build, improve or repair their credit history.
But instead of borrowing money at an ultra-high interest rate, you’re just borrowing based on the money you put in your secured account to prove that you are a worthy borrower down the line.
Chime, a popular new fintech company presenting itself as a banking alternative, offers this service to people with a Chime Spending Account and a qualifying direct deposit to that account.
Chime is a financial technology company and not an actual bank. Banking services for the Chime Credit Builder Card are provided by Stride Bank, N.A., Member FDIC.
Think of the Chime Credit Builder as a modern-day solution to a secured credit card, which is often rife with predatory interest fees, junk fees, and restrictive policies.
Those cards can end up being temporary financial prison sentences for people who are trying to qualify for more suitable lines of credit.
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How Chime Credit Builder Work
Chime offers this credit-building service to people willing to do at least some of their basic financial transactions with the company.
Set-Up Process
Open a Chime Spending Account. To apply for this card, you must first have a Chime Spending Account. This works just like an online checking account.
Team Clark’s Christopher Smith says this about the Chime Spending Account: “Free from the overhead expenses of operating physical branches, Chime passes along those cost savings to customers. It doesn’t charge monthly or overdraft fees and also doesn’t require a minimum deposit.”
Make a qualifying direct deposit. To get the credit card, you must have made qualifying direct deposits of $200 or more to your Chime Spending Account within the last year.
If you dig into the fine print, you’ll find that this direct deposit must be via ACH from an employer (government payments count, too) and cannot be substituted by personal transactions from Venmo, PayPal, or another peer-to-peer digital wallet.
Apply for the Chime Credit Builder credit card. With an open Chime Spending Account and a qualifying direct deposit, you’re ready to apply for the secured credit card. There is no credit check required to apply for the card.
Set your spending limit by depositing money. Once you are accepted into the program, you’ll be able to set your spending limit for the card by depositing money into your secured account.
In the most basic terms, you’re simply borrowing your own money to prove that you can pay it back at the end of the billing period.
How to Use Chime Credit Card
This may sound different from a regular credit card, but your day-to-day behavior with it will actually be pretty similar to using a conventional credit card.
Chime touts a four-step process for using this card and consequently boosting your credit score.
Move your money into the Chime secured account. This is the part that is not like a traditional credit card. You’ll need to load up your account in order to spend (kind of like a prepaid card).
Spend your money with the Chime Credit Builder Visa card. This part is exactly like using a traditional credit card. It’s a Visa credit card that will spend just like any other. When you make a purchase, that amount is set aside in the secured account.
Pay your balance each month. The money set aside in the secured account can automatically pay your month-end balance. You won’t get charged any interest, but you’re also required to pay the bill in full each period.
This is a key piece to improving your credit score, so don’t miss out on it.
Watch your progress get reported to the credit bureaus. This is also like a conventional credit card. Chime reports your payment activity to the credit bureaus. This can help build your credit score (more on this later).
Everything you deposit in the Chime secured account can be accessed toward paying your balance, whereas secured credit cards often require a large deposit that cannot be used to pay your monthly bill.
Purchases with traditional secured cards may also be subject to extremely high-interest rates.
Card Specs
Usually, when you get to the “card specs” section of one of our credit card reviews, you’ll see a lot of talk about fees and rewards programs. The Chime Credit Builder is free from most of those details.
In other words, Chime is keeping it really simple. And when it comes to new credit or repairing credit, simple is almost always the best way to go.
The answer is “NO” for any of the following common fees:
‣ Annual fees
‣ Maintenance fees
‣ International fees
‣ Interest on purchases
‣ Minimum security deposit
Again, these are things that really make the Chime secured card stand out when compared to some of the traditional secured cards on the market. Fees are the norm there.
Of course, the flip side is that there are no real rewards or benefits to speak of here.
The answer also is “NO” on things like welcome bonuses, cashback rewards, or perks such as travel, cell phone, and auto rental insurance.
What Gets Reported that Will Impact My Credit Score?
Since this card is designed to help you increase your credit score, Chime reports some of the things that will help you.
Chime reports your activity with this card to the following credit bureaus:
‣ TransUnion
‣ Experian
‣ Equifax
And you’ll be pleased to know that Chime will send information on the following:
‣ On-time payments: This can help your payment history, which is a key factor in determining your credit score.
‣ Duration of credit relationship: This is another one that helps your credit score over time. The longer you successfully do business with Chime (or any other lender), the more reliable you appear. Your credit score likely will go up as a result.
You’ll also benefit from what Chime doesn’t report:
‣ Credit utilization: This is a measure of how much of your available credit you’re using at any given time. The lower your utilization, the better. Because there’s no pre-set limit with Chime, this credit utilization doesn’t apply for this card.
This allows you to spend freely, up to the amount you’ve deposited, without worrying that you’re going to impact your credit score negatively.
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How Much Your Credit Score Improves with this Card
Chime touts that participating in this Credit Builder program can, on average, increase your credit score by 30 points, as long as you make your payments on time.
It’s important to note that the credit score change is going to be different for everyone: You have a unique financial situation that is graded as such. But generally speaking, on-time payments and growth in your length of credit history should have a net positive impact on your credit score.
The 30-point increase claim comes from a representative study conducted by TransUnion.
According to Chime, the study uncovered that “members who started using Chime Credit Builder in September 2019 observed a median credit score (VantageScore 3.0) increase of 30 points by January 2020.”
One impact to your credit score, though, that is likely unavoidable is an initial dip when you open your card with Chime. The credit bureaus typically ding you for increasing your number of open lines of credit, but your score should bounce back quickly with positive credit activity.
Chime Visa Debit Card vs. Chime Credit Builder Card
If you’ve been considering signing up for Chime, you probably have noticed that the company is promoting the Chime Credit Builder card alongside a Chime Visa Debit Card.
The debit card is designed to allow for spending directly from your Chime Spending Account with no regard to credit reporting or credit score. It functions like a traditional debit card, meaning that money disappears from your account as soon as you swipe the card.
The debit card also carries a Visa logo and can be used wherever Visa is accepted.
The Chime Debit card does not have a monthly account fee or a minimum balance requirement.
Chime Credit Card Pros
Here are the advantages of using chime credit card.
‣ Most new borrowers and credit rebuilders will be eligible to participate in this program.
‣ You can avoid fees and interest charges associated with “traditional” secured credit cards.
‣ No credit check is required to participate.
Chime Credit Card Cons
The use of chime credit cards equally has its disadvantages.
‣ You have to open a Chime Spending Account to be eligible to apply for the credit card.
‣ You need to have a direct deposit made to your Chime Spending Account before applying for the card.
‣ Your spending limit is based on how much you deposit, so effectively there’s no “instant access” to money you don’t have.
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Frequently Asked Questions
This section provides answers to common questions on the Chime credit card.
Ques: Are ACH transactions processed on weekends?
MYTH: Direct Deposits aren’t processed on weekends, but bill payments are.
FACT: The ACH Network does not settle payments on weekends (or holidays) when the Federal Reserve system is closed. This applies to both ACH credits (Direct Deposits) and ACH debits (bill payments).
Standard industry practice is that paydays that otherwise would be on a weekend or holiday are paid on the prior Friday, while bill payments are due and collected on the next business day; in each case favoring the employee/consumer.
MYTH: If payday is on a Friday, you won’t get your money until Monday (or later if Monday is a holiday).
FACT: If payday is Friday, payroll payments made by Direct Deposit are available in employees’ accounts by 9 a.m. on Friday in virtually all cases.
For example, if your payday is Friday, Aug. 27, 2021, and you receive it through Direct Deposit, the money will be available in your account by 9 a.m. on Friday to withdraw or cover other payments.
Even a Direct Deposit sent on Friday morning can be available to an employee by 5 p.m. using the modern ACH Network’s Same Day ACH capability.
Ninety-four percent of American workers use Direct Deposit, according to a 2020 survey by the American Payroll Association, enabling fast access to their money on payday.
Workers paid by check do not get access to their funds until after the check is cashed or deposited.
Ques: How good is the Chime credit builder card?
The card is basically debt-proof, but you’ll have to be OK with opening a Chime account. Also note that there are no rewards or upgrade paths, and other unsecured cards you may get later won’t provide the same training wheels.
Ques: How to transfer money to my Chime account using a credit card?
You can link an external account that you own to your Chime Checking Account:
‣ Log in to your online account at www.chime.com.
‣ Select Move Money
‣ Select Transfers.
When you are prompted, enter the login credentials for your other bank (your external account).
Your external account will be instantly linked to your Checking Account.
Once your external account is linked, you can use the Chime app to make transfers from the external account to your Checking Account, with the following limits:
‣ A maximum of $10,000 per calendar day
‣ A maximum of $25,000 per calendar month
‣ Transferred funds will be available within five (5) business days.
Ques: Is Chime Bank legit?
Chime is an online-only financial technology company that partners with two banks to offer checking and savings accounts.
It doesn’t work like a traditional neighborhood bank, but its accounts still have FDIC insurance, so they’re safe places to keep your money.
Chime has no monthly or overdraft fees, and it lets you round up purchases to the next dollar and save the remainder. But it can be expensive to deposit cash.
Ques: How do I get cash from Chime Spot Me?
‣ Chime SpotMe works with Apple Pay. To use Chime SpotMe with Apple Pay, you don’t really have to do anything different.
You simply make your purchase using Apple Pay like normal, the only difference is if you don’t have adequate funds in your Chime account, you’ll utilize Chime SpotMe to make the purchase.
‣ Chime SpotMe works at an ATM to withdraw cash. You can withdraw up to $200 from an ATM using the Chime SpotMe feature.
Ques: Can I load my Chime card at Walgreens?
You can deposit cash to your Chime Checking Account at Walgreens locations, including Duane Reade locations, without fees.
Other third-party money transfer services that are used to add funds to your Chime Checking Account may impose their own fees or limits such as:
‣ Fees per transaction
‣ Daily, weekly, or monthly limits on the frequency or the amount of cash you may add to the Chime Checking Account
Ques: How can I transfer funds from a credit card to a bank account?
Money can be transferred by directly accessing your credit card’s online banking account. the charges for making a transfer from a credit card to a bank account varies from bank to bank. follow the procedure provided below:
‣ step 1: open your bank’s website
‣ step 2: log in to your credit card account
‣ step 3: select the transfer option
‣ step 4: enter the amount you want to transfer
‣ step 5: enter the required details mentioned in the form
‣ step 6: follow the prompts to complete transactions
Final Thoughts, the Chime Credit Builder Card is just one of a handful of emerging solutions for those who haven’t established credit or need to repair their credit history.
And as people who are determined to help consumers make smart financial decisions that positively impact their lives, the development of programs like this one is music to Team Clark’s collective ears.
Remember, Chime is not a bank. It’s a financial technology company with banking services provided by a bank. And it’s not alone in trying to disrupt the secured credit card industry.
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