This online bank’s credit card could be a game-changer for people with low scores
Secure your financial future with Chime's latest product.
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If you’ve seen ads for Chime but can’t recall ever coming across a physical location, your hunch would be correct.
Chime isn’t actually a bank, but a startup that offers banking services completely online. Still, customers can rest assured their funds are safe with Chime, as deposits are backed by its FDIC-insured partners, the Bancorp Bank and Stride Bank. That means funds up to $250,000 are covered if the bank fails.
If you can’t even remember the last time you set foot in one of your current bank’s branches—even before the coronavirus pandemic turned our everyday lives upside down—yet you’re still paying maintenance and other types of fees, Chime might be a convenient option for you to manage your money.
And with a brand-new product on the market, there’s another reason to consider doing business with Chime, especially if you’ve had trouble getting approved for credit in the past. With its 0% APR secured card, there’s no minimum deposit, and the company doesn’t check your score.
Intrigued? Read on to find out if Chime is right for you.
What are Chime’s online banking terms?
The fine print is subject to change, but as of publication, here are the fees, rates, and other terms you should know about if you open an account:
- Minimum balance required to open: None
- Monthly fee: None
- Overdraft fee: None
- ATM fees: None at MoneyPass and Visa Plus Alliance ATMs; $2.50 at out-of-network ATMs
- Foreign transaction fee: None
- Checking account APY: N/A
- High-yield savings APY: 1.00%
Who should consider using Chime?
If you’re generally savvy when it comes to mobile and online banking and can’t even remember the last time you set foot in one of your current bank’s in-person branches, Chime just might be for you. Same goes for anyone who’s sick of paying fee after fee with their current bank.
Keep in mind: You need to be at least 18 years old and a U.S. citizen. To use the mobile app, you'll need an iPhone or iPad running iOS 11.0 or greater, or an Android device running OS 5.0 Lollipop or greater.
What types of products does Chime offer?
Chime currently offers two accounts, and has a waitlist for its secured credit card. Here are the need-to-know details:
Spending account: This is the bank’s default account that’s required to become a member. It comes with a debit card with access to over 38,000 fee-free ATMs across the U.S., though you can also combine your debit card with Apple Pay and Google Pay to leave your wallet at home. There’s no minimum deposit required to open it, and the account also doesn’t have any monthly maintenance, overdraft, or foreign transaction fees—a plus if you plan on resuming your frequent travels following the coronavirus pandemic.
High-yield savings account: With this optional account, customers can earn a small amount of interest on their savings—typically higher than the average national rate. Like the checking account, there are no fees or minimum balance requirements, in addition to no limit on how much interest you can earn.
Credit Builder: A new offering, this secured credit card is available to current Chime customers, and it stays true to the company's no-fee philosophy. It lacks an annual fee, foreign transaction fees, late payment fees, and comes with zero interest. Plus, there's no minimum security deposit required—you set your own credit limit.
What fees does Chime charge?
In today’s day and age, most banks are loaded with hidden fees, but worry not: Chime isn’t one of them. As mentioned earlier, customers don’t need to hand over additional funds for opening an account, and maintenance, foreign transaction, and overdraft fees don’t apply either.
There's no fee for replacing a lost or stolen card, though you will need to hand over $20 if you'd like to expedite your request for a new Credit Builder card.
And while you can avoid fees by withdrawing cash at a MoneyPass or Visa Plus Alliance ATM, you may be subject to an out-of-network ATM’s fees. The good news is you can track down nearby locations in the mobile app.
How can Chime help you manage your money?
Chime was created with mobile banking in mind. Whether you’re using an iPhone or Android device, the user-friendly app allows you to do everything from deposit checks to pay bills. You can get real-time notifications every time you swipe your card or send money to friends or family. They don't have to be fellow users; you just need their phone number or email address to make good on your IOUs.
If you need to write a check, the app can do that, too. The company will send one on your behalf after you make the request. Take note that it can take up to nine days for it to get where it needs to go.
Looking to grow your emergency fund? Every time you make a purchase, Chime rounds up the transaction to the nearest dollar, and transfers the difference to your savings account. You can also automatically transfer a portion of your paycheck every time you get paid. Additionally, if you get your paycheck via direct deposit, you can have access to it up to two days early.
The checking account's overdraft feature is known as SpotMe. If you overdraw your account up to $100, Chime will apply your next deposit toward your negative balance. When this happens, you’ll have the ability to leave an optional tip to pay it forward. You must have monthly direct deposits of at least $500 to be eligible to use this feature.
What's the deal with Chime's Credit Builder?
If you want to get your hands on this secured credit card, you’ll need to be a Chime customer and have a direct payroll deposit within the past 45 days that’s at least $200.
Unlike many traditional secured cards, this one does not require a credit check or a minimum deposit. You choose how much you’d like to put into the account (up to $10,000), and, notably, these funds can be used to pay your bill at the end of the month. With most secured cards, you typically don't receive the deposit back until you prove responsible use or close your account.
Having this in your wallet can help you build your credit history. The company has a feature to automatically pay your statement’s entire balance every month, so you’ll never be late for a payment, which is reported to the major credit bureaus.
Perhaps the biggest bonus: Because there is no predetermined credit limit, Chime does not report your utilization ratio. With this in mind, you don’t have to be as mindful of maxing out the account as you would with other secured and unsecured cards.
What security and protection does Chime offer?
In addition to being FDIC-insured through its partners, the app allows you to block debit card transactions if your card is lost or stolen. You can also set up instant transaction alerts so that you’re notified if it does get used while not in your possession.
What’s Chime’s customer service like?
Members can reach Chime representatives by emailing firstname.lastname@example.org, or calling 844-244-6363 Monday through Saturday from 7 a.m. to 7 p.m. CST and Sunday from 9 a.m. to 5 p.m. CST.
The website also has a fleshed-out help section that you can search for answers to frequently asked questions. When it comes to changing personal information, members can easily make updates on the website or via the app.
How does Chime stack up to other banks?
The current national average for savings accounts is 0.05% APY, which Chime beats at 1.00%. That rate is also higher than what Simple and other online banking startups offer. If you want the best available rate, however, you’ll likely want to shop around. For example, you have the potential to earn more than double that as a Varo customer.
Simple offers joint accounts for those looking to easily manage their money with roommates or partners, a feature Chime does not yet offer.
Where Chime may shine the most is its secured credit card, an option you won't find at many other online banks, not to mention more flexible terms than you find at traditional credit card issuers.
What drawbacks does Chime have?
Next to other banks, particularly big-name ones, Chime’s account offerings are pretty limited. You won’t find certificates of deposit, retirement account options, or any mortgage or auto loan options here—at least at this very moment anyway.
But if it’s not a must for you to have all of those accounts in the same place (especially if you’re on the hunt for the best rates on each one), then this shouldn’t deter you from choosing these accounts for your basic banking needs.
If you frequently deposit cash, you'll have to consider how much of a hassle and cost it would be to you. With Chime, customers have to visit CVS, Walmart, and other locations that use GreenDot. And while Chime itself does not charge a fee, the retailers may impose one of their own.
So, should you open a Chime account?
If you’re fairly tech-savvy and are looking for basic checking and savings accounts to park your cash with easy access, then this mobile-first option may be for you. You really can’t beat the convenience of the ability to do just about everything online, with no hidden fees to boot.
Those looking to bulk up their credit history may be particularly interested in its brand-new secured credit card. You'll have to join a waitlist, but in the meantime, there are plenty of other ways to improve your score without a credit card.