The Secured Chime Credit Card Makes You Wonder, “Will This Really Help Me Improve My Credit?”

Just because the secured Chime Credit isn’t like other credit cards, that doesn’t mean it’s a scam or a trick.

The Chime Credit Card is accepted as you’d expect when using it online or at a restaurant.  Chime is a very popular banking option and an extremely popular app.

Is the Chime secured card a real credit card? The answer is yes — it says so right on the front of the card. Then again, it’s not like 99% of other credit cards. (There are some FAQs later in this article.)

You should know that the Chime credit card can help you establish, improve, or rebuild your credit. It’s not a trick or a bait-and-switch financial product. It’s legitimate.

Many personal finance professionals and consultants/advisors endorse Chime. The main reason is that it does not have the fees associated with traditional big banks’ checking accounts, savings accounts, and credit cards. Of course, that’s referring to institutions such as Bank of America, Chase, Wells Fargo, and others.

However, there are a few key things to know about Chime and its credit card.

1. Chime is a legitimate and trusted company, known for its success.
2. The Chime Visa Credit Card is not quite like a Visa credit card you might have right now, have had in the past, or may have in the future.
3. In the long run that might be a good thing for your finances.

A closer look at the Chime Credit Card.

The product’s official name is The Secured Chime Credit Builder Visa® Credit Card. The key words in the name are “secured” and “credit builder.” Of the two, secured is the most important.

• Secured. The card is a secured credit card, which means the purchasing power of the card isn’t based on credit, but rather on the amount that Chime offers as a credit limit. Instead, it’s based on a dollar amount you set aside yourself, which acts as your credit.
• Credit builder. This reveals who it’s intended for: it’s primarily for individuals who need to establish a credit history or improve a weak credit score.  It may also be ideal for people with poor credit who need to rebuild their financial profile.

Typical credit cards can be a good thing…or not.

Thousands of people get into credit card debt and trouble every year. They max out their credit cards, start missing payments, and may try to borrow more to get by. Their credit score, a measure of a person’s creditworthiness, hits rock bottom.

A poor credit score is defined as a FICO® score of 580 or less.

Worse than that, a poor credit score tends to reflect poorly on a person’s character. It can affect someone’s ability to get a good job or even rent an apartment. And, of course, you likely won’t be approved for a loan of any kind or another credit card with a low or poor credit score. It all catches up to you. If you have a poor credit score, you want to take steps to improve it.

Are you new to credit cards? Pay close attention.

Someone who doesn’t have any credit yet is in a good spot. They can start slowly and use credit wisely, avoiding trouble. Of course, every person who winds up in credit card debt started with a clean slate, didn’t they? 

Credit cards and credit in general are a two-edged sword.

• Effective credit management and responsibility can lead to a strong credit history, which opens the door to numerous opportunities.
• However, credit misuse can lead to a poor credit record, which can cause more significant financial problems.
• There are a few credit experts, notably Dave Ramsey, who don’t believe in having credit and taking on debt..

Secured credit cards to the rescue.

Whether someone is a credit newbie or a fallen credit user, the Secured Chime Credit Builder Visa Credit Card could be an ideal place to start. The quickest way to learn more is to see the answers to Frequently Asked Questions.

Q. Why is the Chime Credit Card different from the typical credit card?

A. Because it is a “secured” credit card, meaning the “credit” you have available is backed (secured) by actual cash…your own money. By contrast, a typical credit card company sets a credit limit against a card, which is not secured. If it’s $200, you are borrowing that amount. A typical credit card allows you to repay the money they lent you in increments, with interest. That’s how people get into debt fast.

Q. Isn’t the Chime Credit Card just a debit card?

A. No. With a debit card, any purchase or transaction you make is automatically deducted from your checking account. (Chime Credit card transactions are charged to the account to be paid monthly…like a credit card.) Additionally, debit card transactions are not reported to the credit bureaus because they’re not considered credit transactions. Chime Credit Card payment history is reported.

Q. What is the credit limit on a Chime Credit Card?

A. There isn’t one, at least not one that is determined by Chime. Instead, you determine the amount of “spending power” you have on your Chime credit card.

Q. How do I determine my own credit limit?

A. Think of your Chime spending power as your credit limit. When you open your Chime Credit Card, you also set up a Credit Builder secured deposit account that’s linked to it. It’s where you deposit money that backs up your credit card and secures it. In essence, Chime is simply helping you set up a credit card account, backed by your own money.

So, if the opening deposit in your Credit Builder secured deposit account is $500, your credit limit would also be $500. You can always increase your spending by adding more money to your Credit Builder deposit account. You can make the limit whatever you want.

Q. What is the monthly payment with a Chime Credit Card?

A. Each month, you’re required to pay whatever you’ve spent with your Chime credit that month. If you spent the whole limit, you owe that amount. That won’t be a problem, as the funds needed for your payment are already in your associated deposit account. You can even set it up to have Chime automatically make the payment from your account. That way, you’re never really in debt.

Q. Do I have to be approved for a Chime credit card?

A. Not at all. First, you open a Chime checking account to establish a relationship with them, then open a Chime credit card account. No approval is required; a deposit is all that is needed to get started.

Q. Does the Chime Credit Card have an interest rate?

A. No, because it is a secured credit card. You’re never borrowing or using Chime’s money; you’re using your credit based on your Credit Builder deposit. You could think of it as a zero-interest rate, if that would help.

Q. Will using the Chime Credit Card help me build or improve my credit?

A. Yes, it will. Chime will report to all the credit bureaus that you make your credit card payments on time, and the bureaus will also know how long you’ve had the account.

Q. Can I hurt my credit using the secured Chime Credit Card?

A. Only if you’re late on payments.  A payment is due each month, and it’s up to you to make your credit card payment on time! If you’re late on a payment, Chime will report it to the credit bureaus, which will negatively impact your credit score. (Your on-time payment history on all credit cards makes up 35% of your credit score.)

Q. Can I use a VPN to mask my IP address when I open a Chime account?

A. Yes, but, according to Chime’s own website, only if you live in the U.S. or the District of Columbia and also have a valid Social Security Number.

Q. Is there a drawback to having a secured credit card compared to a typical one?

A. Keep this in mind. By using a Chime secured credit card, you can’t buy a 2,000 big-screen TV, a $3,000 furniture set, or take a $4,000 vacation with it and pay it off over time.

However, remember that you are unlikely to fall into disastrous debt by sticking to your Chime credit card instead. Dave Ramsey would be proud of you because the card is designed to improve your credit history, not worsen your credit woes.

Do more to protect your finances.

To learn more about securing your money and personal finances, visit our Learning Center at WhatIsMyIPAddress.com. You’ll find many informative, easy-to-read articles to help you protect what’s important to you.