Chime has launched a new card and tool to help customers build credit

US challenger bank Chime has launched a new type of payment card to help millennials establish a credit history in a time when many young customers don’t have one.

The reason why many young Americans do not have a credit history is because they prefer to use debit cards over credit cards as it gives them more control of their finances. The problem with that is that they can’t use transactions made through a debit card to build a credit history, which could land them in some trouble when they are looking to make a bigger purchase like a car or a house.

That’s where Chime’s new Credit Builder Visa Credit Card comes in. The tool essentially works as a debit card where users can only use money money on their Chime Spending Account with money put into their Credit Builder Secured Account, TechCrunch reported. The idea is that this will help customers build up their credit history without losing control over their finances.

The card doesn’t come attached to any annual fees, interest or a minimum security deposit.

Chime has been beta testing the new tool for a year and now has 200,000 people enrolled in the service. The company has opened a waitlist for people interested in tapping into the new service. It will enroll more users every week this summer.

The neobank has gone from strength to strength lately. Even though both domestic and foreign challenger banks are looking to enter the US and take a slice of the pie, Chime still runs 60% of the market. It also raised $200m in a funding round in March 2020.

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