Self Secured Visa vs Chime Credit Builder Credit Card

2 Secured Credit Cards But Different Ways to Get

Both the Self and Chime have secured credit cards but you need to take different routes to get one. Self requires that you get a credit builder account and loan with them and meet certain payments before you can get their secured credit card. Chime requires that you set up an online banking account with them and do a certain amount of direct deposit within a year before you can get their secured credit card. Even both their secured credit card work in different ways. In this comparison, we will dive deeply into both cards and see which is the better card to get.

The Basics

Both Self and Chime differ in quite significant ways so before we look at their similarities and differences, let's look at how each card works.

Self Credit Builder + Secured Visa Basics

The Self Secured Visa is targeted specifically at those who find it a stretch to fund a security deposit for a credit card yet want to get started immediately on their credit building. Self offers a way out of this predicament via a credit builder loan. Unlike a traditional loan where the loan amount is deposited in your checking account, with a credit builder loan, you do not get to see the loan amount at all. Instead, you are technically given a loan and you simply pay back the loan with interest every month. That cash is yours and deposited into the credit builder account. Because it is technically a loan, your payments are reported to the three major credit bureaus. And because the loan amount is not given to you, Self does not check your credit when you apply for their credit builder loan because the risk is absolutely minimal to them.

Instead of choosing a loan amount, you choose the payment amount (the minimum monthly payment is $25) and the loan maturity is 24 months. After you have paid back $100 (and made a minimum of 3 payments of at least $25), you can then set up your secured credit card account. You can transfer money from your credit builder account into the secured account. This becomes your security deposit and your credit limit. The minimum security deposit amount is $100. Self only allow you to fund your security deposit only once so you have to be sure what credit limit you want in your secured card before you transfer the amount over. There is no second chance to add more security deposit at a later date.

The Self Secured Visa has no annual fee and there is also no credit checks when you open your secured account.

Chime Credit Builder Secured Visa Basics

To get a Chime Credit Builder Secured credit card, you first need to open what Chime calls a "spending account". This is essentially an online banking account. You also need to set up a direct deposit and deposit at least $200 within 365 days (1 year) of opening the account. Opening a Chime spending account does not involve any credit checks.

Once you have met these criterias, you can get your secured credit card. You can do so via opening what Chime calls a "credit builder account" (not to be confused with the term credit builder used by Self). You can transfer any amount from your "soending account" to your "credit builder account". This acts as your security deposit. You can then use your secured credit card with the security deposit as your credit limit. What makes Chime different from other secured credit cards is that you can use your security deposit to pay off your monthly bills. In fact, you have to pay in full every month and cannot carry a balance. You can "top up" your "credit builder account" every month automatically (via "Move My Pay" from their app) and set up autopay as well (via their "safer credit building" feature). In a sense, the Chime Secured Visa acts more like a prepaid card and your security deposit is not tied up.

The Chime Credit Builder Secured Visa has no annual fee and you do not have to go through any credit checks as well.

Similarities

• No Credit Checks - There are no credit checks when you go through the whole process of getting the secured credit cards from both Self and Chime for both the secured cards, credit builder accounts and the spending account.


• No Annual Fee - Both secured credit cards have no annual fee.

Differences

• Requirements - One of the biggest difference between Self and Chime is the requirements that you need to get their secured credit cards. Self requires you to get a credit builder loan and is ideal for those who need to save up to fund their security deposit. In contrast, Chime requires you to have a banking account and direct deposit relationship to get their secured card.


• Characteristics - Secured vs Prepaid - While the Self Secured Visa works like a regular secured credit card, the Chime Credit Builder resembles more of a prepaid credit card in that you can use the security deposit to pay your bill every and simply replenish it every month. You also have to pay in full.


• Credit Limits - The credit limit for the Self Secured is fixed by your initial security deposit. In contrast, the credit limit for Chime is flexible as you can replenish your previous months security deposit.

Which is better?

As far as the actual secured credit cards go, I actually prefer the Chime Credit Builder Secured Credit Card for a couple of reasons. Firstly, your security deposit is not tied up like a regular secured credit card. You can use it to pay off your bill every month and replenish it from your Chime Spending Account. In fact, this card works more like a prepaid credit card. Because you can top up your credit builder account every month, your credit limit is essentially flexible. However, to get this card, you need to set up a Chime banking account and direct deposit. For some of you who are already happy with your existing bank account and have payroll direct deposit already set up, moving to a new bank might be just too much of a hassle. Only you can decide if this is worth it.

The Self Secured Visa works more like a traditional secured credit card and if you are ok with tying up some cash for your security deposit, then it is a very good secured credit card as well. Unlike Chime, the Self secured credit card is specifically suited to those who need to save up for a security deposit. And by using their credit builder account and loan, you can rebuild your credit while you save for your deposit. In fact, once you get your secured credit card, you will have two tradelines on your credit report - one for the credit builder loan and the other for the secured credit card.

To sum up, I think the Chime Credit Builder Secured Credit Card comes up slightly ahead of Self mainly because your security deposit is not tied up. However, opening a new online banking account and setting up a new direct deposit may be a bridge too far for some of you. For those who are stretched to fund a security deposit for a secured credit card at the moment, the credit builder loan from Self is a good way to start saving and rebuild your credit at the same time.