With the new Chime Credit Builder Visa Credit Card, users will be able to transfer funds from a spending account to their Credit Builder Secured Account and can charge up to that much wherever they can pay using Visa.
Unlike a traditional credit card, which allows for overspending, the new Credit Builder only allows up to whatever is in the account, TechCrunch reported.
The new card is a reaction to the popularity of debit cards in the U.S., with half of non-cash transactions being debit card-related in 2018, TechCrunch reported, citing the Federal Reserve.
Young people are likely to prefer debit cards as well, with a Chime survey finding that 67 percent of millennial respondents preferred them due to the perceived security and less chance of going into debt.
Chime’s card intends to bridge the gap between that security and the benefits of having a credit card, according to CEO Chris Britt.
“Americans have embraced debit cards for greater control, but this limits their ability to establish or build their credit score,” he said, according to TechCrunch. “We created Credit Builder to help our members stay in control and safely build their credit with their everyday purchases.”
At the end of the month, Chime’s Safer Credit Builder feature automatically pays off the credit card balance using the funds from the secured account, TechCrunch reported.
Chime helped out during the early days of the pandemic by letting people take out $200 cash advances as a way to help people strapped for cash pay their bills or perform other necessary functions. The feature was available for 100,000 people who were already users of the bank, and the bank said it was OK with taking the risk because it expected to come through the pandemic without major damage.