Challenger Bank Chime Launches a Debit/Credit Hybrid Product for Credit Building

Challenger bank Chime has made a significant move in the financial industry by launching a new debit/credit hybrid product aimed at helping its customers build credit. With 8 million accounts and a $5.8 billion valuation, Chime is a major player in the challenger bank space.

The new product functions like a secured credit card, allowing users to add money to their Chime Spending Account and make everyday purchases using the credit card. At the end of the month, Chime’s Safer Credit Builder feature automatically pays off the credit card balance from the secured account on time, and reports the payment to major credit bureaus.

One of the key appeals of this new product is its lack of fees. There is no annual fee, interest, or minimum security deposit required, making it a more attractive option compared to traditional secured credit cards.

Chime has been focused on addressing the credit building needs of its users for some time, as evidenced by its acquisition of the credit score improvement service Pinch in 2018. This new product is a continuation of Chime’s efforts to help young adults build better credit and financial habits.

While the product offers a unique solution for building credit, it remains to be seen how account holders will manage spending beyond what is in their checking account. Overall, Chime’s new debit/credit hybrid product is a step towards providing financial education and support to its customers, especially those with little credit history.