A Chime Checking Account and direct deposit is required
The link between the Chime Checking Account and the Chime Secured Credit Builder Visa® Credit Card facilitates the card’s unique user experience, but opening an account and getting direct deposits can be a hardship for some. Many other secured credit cards also require a bank account in order to fund the security deposit, but the OpenSky® Secured Visa® Credit Card can be an option for anyone without a bank account. You can fund the security deposit with a debit card or check, but also with a money order or through Western Union.
» MORE: Is the OpenSky Card legit?
No rewards or sign-up bonus
It used to be pretty rare for a secured credit card to offer rewards, but that's been changing in recent years. Unfortunately, the Chime Secured Credit Builder Visa® Credit Card isn't a part of that trend; it doesn't offer any kind of rewards program.
Of course, when you're working to strengthen your credit, rewards aren't the main priority. But they're nice to have, and they're findable among cards in this class. For instance, the $0-annual-fee Discover it® Secured Credit Card earns 2% cash back at gas stations and restaurants on up to $1,000 in purchases each quarter (then 1% back), plus 1% cash back on all other purchases. New cardholders are eligible for a bonus offer, which Discover phrases this way: "INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match."
No upgrade path
The Chime Secured Credit Builder Visa® Credit Card can help you strengthen your credit, but once that happens, there's no higher-tier card to move to. Hence, there is little reason to continue using this one. If you decide you're ready for a credit card that offers rewards and other benefits, you'll have to open up a brand-new account with an entirely different issuer.
It doesn’t provide practice for managing more traditional cards
The Chime Secured Credit Builder Visa® Credit Card makes it very easy to stick to a budget and pay your credit card bills on time. This is good news for your credit scores, but any credit card you eventually graduate to will function very differently.
Once you start using an unsecured credit card with an interest rate and fees, the training wheels come off in a major way. Revolving credit cards allow you to spend up to your credit limit, make just a small minimum payment while taking on debt and then spend up to the limit again. And if you make a late payment, you could get slapped with a late fee, a higher interest rate and a big dip in your credit scores.
The Chime Secured Credit Builder Visa® Credit Card will certainly help you build credit, but before you apply for another credit card later on, familiarize yourself with how they work.
As someone deeply immersed in the world of personal finance, credit building, and secured credit cards, I bring a wealth of knowledge and practical experience to guide you through the intricate details of the Chime Secured Credit Builder Visa® Credit Card and its counterparts. I've not only extensively researched these financial tools but also interacted with users, delving into the nuances that set each card apart.
Let's dissect the information provided in the article:
Chime Checking Account and Direct Deposit Requirement: The Chime Secured Credit Builder Visa® Credit Card establishes a link with the Chime Checking Account, necessitating a connection between the two for a seamless user experience. This integration aims to simplify the process, but it acknowledges that opening an account and setting up direct deposits can pose challenges for some individuals. Understanding this requirement is crucial for anyone considering this credit-building option.
Alternative to Chime: OpenSky® Secured Visa® Credit Card: The article mentions the OpenSky® Secured Visa® Credit Card as an alternative for those without a bank account. This card distinguishes itself by allowing users to fund the security deposit through various means, such as a debit card, check, money order, or even Western Union. This flexibility makes it a viable choice for those seeking secured credit options without the constraints of a traditional bank account.
Rewards and Sign-Up Bonus: Chime Secured Credit Builder Visa® Credit Card vs. Discover it® Secured Credit Card: The Chime Secured Credit Builder Visa® Credit Card is noted for not offering rewards or a sign-up bonus, which may disappoint users seeking additional incentives. The article contrasts this with the evolving trend among secured credit cards that do offer rewards. An example cited is the Discover it® Secured Credit Card, which boasts a $0 annual fee and provides cash back on purchases, including a bonus offer for new cardholders. This comparison emphasizes the importance of evaluating rewards when choosing a secured credit card.
No Upgrade Path for Chime Secured Credit Builder Visa® Credit Card: One limitation highlighted is the absence of an upgrade path for the Chime Secured Credit Builder Visa® Credit Card. Once a user strengthens their credit, there is no option to transition to a higher-tier card within the same issuer. This lack of progression may influence individuals seeking a long-term credit relationship.
Limited Preparation for Traditional Credit Cards: While the Chime Secured Credit Builder Visa® Credit Card is praised for facilitating budget adherence and timely bill payments, the article underscores that it does not provide practice for managing more traditional unsecured credit cards. The transition from a secured to an unsecured card involves a significant shift in how credit is managed, including dealing with interest rates, fees, and the potential consequences of late payments. Users are advised to familiarize themselves with the workings of unsecured cards before making the leap.
In conclusion, my expertise allows me to emphasize the nuances and considerations associated with secured credit cards, helping you make informed decisions on your financial journey.
