When it comes to building credit, secured credit cards are some of the best tools at your disposal. However, some secured cards are better than others. The Chime Credit Card is intended as a beginner-friendly secured credit card that offers lots of flexibility and accessibility, plus several credit-building “training wheels” and other useful tools. However, it’s also a very limited card.

If you’re not sure whether the Chime Credit Card is worth your time, you’ve come to the right place. Below, you’ll find a detailed breakdown of everything you need to know about the Chime Credit Card, its benefits, and its downsides.

What Is the Chime Credit Card?

The Chime Credit Card is a secured credit card. Like other secured credit cards, this card can only be used after you put down a security deposit. The security deposit represents the credit limit for the card and is the maximum you can spend with it.

However, the Chime Credit Card is unique among many other secured cards because there isn’t a minimum security deposit. Basically, you aren’t required to put down $100, $200, or some other amount in order to use the card. You can use whatever you like as a security deposit. Keep in mind that whatever you deposit is the maximum credit limit for the card!

The security deposit acts as collateral for Chime. In the event that you default on your credit or don’t pay down the balance, Chime will use that collateral to pay off your debt. However, they will also likely close your account.

The Chime Credit Card is a very simple credit builder Visa credit card. It’s intended to help individuals with no or low credit build up their credit over time. Note that the Chime Credit Card does have a few strings attached, namely:

  • You have to have a Chime Spending Account. This is the account where your security deposit is kept. The Spending Account is necessary because Chime is not a bank. Instead, it’s a financial technology company. All banking services for the Chime Credit Card are offered by The Bancorp Bank or Stride Bank
  • There aren’t any bonuses or rewards to take advantage of. What you see is what you get; in this sense, it’s not a great credit card if you already have excellent credit and want a card that rewards you for spending wisely
  • There’s no way to upgrade the card to a more flexible variant. However, you can increase the available credit limit by adding to your initial security deposit after making your account. You can use direct deposit from a debit card or another bank account

Still, the Chime Credit Card is effectively debt proof. Therefore, it’s one of the best financial tools for individuals with no or low credit or folks who want to build up good credit use habits.

What You Need To Know About the Chime Card

Let’s take a look at some of the important factors of the Chime Credit Card. 

  • No annual fees or interest to worry about. That means there’s no APR either
  • No minimum security deposit; you can choose the maximum credit limit for the credit card
  • Live support 24/7 for card users
  • It’s a Visa card and can be used anywhere Visa is accepted. This includes everyday purchases for things like groceries or gas
  • Includes an auto-pay feature called Safer Credit Building. When you turn this feature on, your monthly balance will be paid automatically on time, every time
  • Chime reports on-time payments to all three big credit bureaus: Equifax, TransUnion, and Experian
  • You can theoretically increase your credit score by up to 30 points over several months so long as you make on-time and regular payments
  • Includes access to an app from Chime. The app allows you to disable your card remotely to prevent people from using it without your permission. You can also turn on transaction notifications and receive real-time alerts for each time the card is utilized
  • You can apply at www.chime.com
  • No credit score is needed to qualify, although you will be more qualified if your credit is between 300 and 689
  • Prequalification is available
  • No credit check, so you don’t need to worry about your credit score being negatively impacted by a hard inquiry

What Is a Credit Score?

Why does a credit building card like the Chime Card matter? It’s all because of credit scores.

In a nutshell, credit scores are estimates of your “creditworthiness”. They are put together by the big credit bureaus mentioned above. Credit bureaus look at all of your credit-related financial information, including:

  • Your payments toward utility bills and other recurring bills
  • How much debt you have under your name
  • The types of debt you have
  • Whether you consistently pay your debt on time
  • And more

After analyzing all these factors, the credit bureaus make credit scores that broadly represent how trustworthy you are when it comes to borrowing money and paying it back on time. The higher your credit score, the more creditworthy you are assumed to be. The reverse is true if you have a low credit score.

Where To Find Your Credit Score

You can request a free credit report from a variety of resources (though some are more trustworthy than others). You can also request a credit report from the credit bureaus. However, you can usually only request a free report from each resource once per year. It breaks down your credit history and all of its major elements, including credit utilization, payment history, interest charges, and more.

How Does Your Credit Score Impact Your Life?

Having a high credit score is important if you want to maximize your financial flexibility and loan options in the future. For example, if you have a high credit score, you’ll qualify for the best loans with the best terms and best interest rates. The same is true when applying for credit cards.

But if you have low credit, you’ll find your financial options significantly limited. You won’t have access to very good loans or lines of credit. On top of that, you could find it difficult to purchase expensive things like houses. Most mortgage loans require you to have at least good credit in order to qualify.

Therefore, it’s a good idea to improve your credit score ASAP if your score is currently low or nonexistent. 

How Using a Credit Card Affects Your Credit Score

Using any type of credit card affects your credit score in a variety of ways. Just having an open line of credit penalizes your account slightly for a few months. Then, so long as you have an outstanding balance on your credit card, your credit score will decrease.

On the plus side, if you pay down the balance each month and in full, your credit score will increase because you’ve shown the bureaus that you know how to use credit responsibly. You also need to pay your credit card bills on time. Late payments can negatively affect your score more quickly than almost any other aspect.

Can Making Payments on Time Improve Your Credit Score?

Yes. Making payments on time shows the bureaus that you know how to use credit the right way and that you can be trusted to pay your debts on time. This is why many popular credit cards, including the Chime Credit Builder Visa Card, offer auto-pay settings. 

Autopay settings allow your bank to automatically make your credit card payments on time each month so you don’t have to worry about it or run the risk of missing a payment by accident.

Does Credit Usage Impact Your Credit Score?

Yes. Generally, the more you use credit, the lower your score will be. It’s best to use credit sparingly and only when necessary (and only when you know you can pay it back on time and in full).

Good use of credit, such as taking out $100 worth of credit, then paying the $100 back within a month, will increase your credit score. Using credit irresponsibly will decrease your credit score.

Does Having a Lot of Credit Cards Affect Your Score?

Yes. You should only ever have one or two lines of credit open at any one time. If you have lots of credit cards, it shows you need multiple credit accounts and is generally deemed untrustworthy by the credit bureaus.

Opening a new credit account decreases your score, as does maintaining multiple open lines of credit. If you have lots of open credit cards right now, close the accounts of the card you don’t plan to use in the near future to give your credit score a quick boost.

Does It Really Matter Which Credit Card You Use?

Absolutely! Certain credit cards are better for building your credit and maintaining a high credit score over time than others. Let’s take a look at some of the best credit cards for building and keeping good credit.

Some Credit Cards Have Higher Limits

Credit cards with higher limits are usually better than cards with lower limits. That’s because reaching your credit limit or cap can decrease your credit score showing the banks and credit bureaus that you maximize your available credit all the time.

Of course, credit cards with higher limits are only available once you get good credit. So it’s important to use secured credit cards like the Chime Card in the meantime.

Certain Credit Cards Have Lower APRs

The best cards also have low APRs or interest rates. That means you’ll pay less for the credit you take out on the cards over time, making paying back the card debt easier. Again, you’ll have access to credit cards with low APRs and interest rates as your credit gets better.

In the meantime, secured cards such as the Chime Card don’t have interest rates to worry about whatsoever. So they’re great if your credit report shows a low or no score.

Can Anyone Qualify for Any Credit Card?

No. Many of the best credit cards require you to have good to excellent credit, which is usually considered 700 or above. Generally, only subpar credit cards with high-interest rates and lots of extra fees are available to those with low or no credit.

There are some exceptions. These are usually cards designed for building credit and helping people get out of credit ruts, like the Chime Card.

Is the Chime Card Good for Building Credit?

It is. It’s a great choice for building credit because it doesn’t come with extra fees and doesn’t have interest rates. As a secured card, you have to have some cash to put into your Chime Secured Account before you can receive a credit card.

But once you do this, you’ll be able to safely use the credit card and pay down your monthly balance on time consistently. In a few months, you’ll show the credit bureaus that you can be trusted and your credit score will increase as a result.

What’s the Bottom Line?

Overall, the Chime Credit Card is a great credit-building Visa. If you have low or no credit, this secured credit card could be just what you need to boost your score by a few points each month. Use it right and pay your bills on time, and you’ll be well on your way to a stellar credit score in no time.

In the meantime, you can still get quality furniture for your house or apartment through Becca’s Home. We offer lease-to-own furniture options for people just like you and, best of all, we don’t rely on credit to qualify buyers! Through this one-of-a-kind system, you lease the furniture through us, then pay off the value of the purchase over time.

If you come into some extra cash, you can purchase your furniture early or take advantage of our 90 day same as cash option. 

Sources: 

Secured Credit Card Definition | Investopedia

annual percentage rate (APR) | Investopedia

What is a credit score? | Consumer Financial Protection Bureau

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