Achieving a good credit score is a total catch-22. You need to establish credit in order to build it. So how do you do that?
Secured credit cards can help. These cards are designed for people who want to build or rebuild credit.
There are plenty of options to choose from when looking for secured cards. And it’s important to find the best secured credit card for your situation.
Chime’s Credit Builder Secured Visa® Credit Card is a smart way to start building credit¹ without annual fees, interest, or credit score requirements. But how does it stack up against Capital One’s secured credit card options?
Here’s what you need to know about Chime vs. Capital One.
What is a secured credit card?
A secured credit card is a credit card that typically requires collateral – namely, a cash deposit – to open.
The minimum deposit for a secured credit card can vary by the card issuer. For example, you might be able to open a secured card with $50, $100, $200, or more.
Your deposit usually doubles as your credit limit. If you open a secured credit card with a $200 deposit, you’d have a $200 limit to start. You might be able to raise your limit by depositing more money with the credit card issuer.
Once your account is open you can make purchases with your card. Each purchase shrinks your available credit and making a payment frees up credit.
Secured credit cards can charge interest if you carry a balance from month to month, and some also charge an annual fee. It’s less common to find secured cards that reward you with miles, points, or cashback on purchases, though there are some that do.
So how does a secured credit card help you to build credit?
To answer that, it helps to know how credit scores work. FICO credit scores², for example, are based on five factors:
- Payment history (35% of your score)
- Credit utilization (30% of your score)
- Credit age (15% of your score)
- Credit mix (10% of your score)
- Credit inquiries (10% of your score)
Opening a secured credit card can help you build credit if you make payments on time each month and keep your balance low. Out of all the FICO score calculation factors, payment history and credit usage are the most important.
Some credit card companies will even upgrade you to an unsecured card and refund your deposit after six or more months of responsible use. At the very least, you may raise your score enough to eventually qualify for a card that offers rewards or premium benefits.
Chime Credit Builder
The Chime Credit Builder card puts a new spin on building positive credit history. We specifically designed this card with Chime members in mind.
Whenever you’re comparing the best secured credit cards, you want to check out the features and benefits. But we prefer to highlight what Credit Builder doesn’t have:
- No annual fee
- No interest
- No minimum security deposit requirement³
- No credit check to apply
That’s a big difference compared to other secured credit cards on the market, which may have double-digit APRs and high annual fees.
So how does Chime Credit Builder work? It’s pretty simple.
First you need a Chime Checking Account and a $200 qualifying direct deposit to apply.⁴ Next, you move money from your Chime Checking Account to your Credit Builder secured account. This is the amount you’ll be able to spend with your card.
Once you’ve moved money over, you can use your Credit Builder card to make purchases anywhere Visa® is accepted. Buy gas, go out to dinner with friends, pick up groceries – all the things you normally spend money on day to day.
Now here comes the credit-building part. The money you moved to your Credit Builder secured account can automatically pay your monthly balance when you turn on the Safer Credit Building feature¹. Chime reports that activity to the major credit bureaus, helping you to build a positive credit history over time.¹
What are the pros and cons?
Chime’s Credit Builder helps to make building credit as easy as possible. Here’s why you might consider it if you’re looking for the best secured credit card:
- There’s no risk of being denied since there’s no credit check to apply. (You just need a Chime Checking account and qualifying direct deposits.⁴)
- You won’t pay any steep annual fees.
- Chime doesn’t charge interest either.
- There’s no minimum deposit required³ and no preset spending limit, so you can control how much you spend month to month.
Chime doesn’t report credit utilization to the credit bureaus as a percentage. Carrying a higher balance won’t work against your score the way that it can with other secured credit cards. That’s just one more way Credit Builder helps you improve your credit health.
Now, are there any downsides? You won’t earn rewards on purchases, but that might not matter much if your main goal is to help build a better credit score.
That’s definitely something the Credit Builder card helps you to achieve. And with the Safer Credit Building feature¹, you don’t have to worry about hurting your score because you accidentally forget to make a payment on time.
Capital One Platinum Credit Card
The Capital One Platinum Secured Credit Card is designed for people who are rebuilding credit. But you could also apply for this card if you’re trying to establish credit in your name for the first time.
Here are some of the main features⁵ to know about this card:
- No annual fee
- $49, $99, or $200 minimum secured deposit is required (based on creditworthiness)
- Deposits are refundable for eligible customers
- Get more spending power with automatic credit line reviews
- Flexible payment due dates
Capital One does check your credit when you apply for the Platinum Secured Credit Card. If you have no credit history at all, you might find it more difficult to get approved.
The initial credit limit is $200, but you can raise that to $1,000 by depositing more money. As you make purchases and then pay them off, you can build credit with the major credit bureaus (Equifax, Experian, and TransUnion).
Capital One can refund your deposit and upgrade you to an unsecured Platinum card if you consistently pay on time. You also get free credit monitoring through Capital One CreditWise.
What are the pros and cons?
The Capital One Secured Credit Card can help you build credit over time. But it may not be right for everyone.
Here are some of the key things to keep in mind about this card:
- The regular variable APR for purchases is relatively high, so carrying a balance month to month could be costly.
- You won’t pay an annual fee or foreign transaction fees, but you may pay a penalty APR for late or missed payments.
- There is a hard credit check to apply, and a new inquiry can ding your credit score.
- You’ll need at least $49 to make your initial deposit, though you may need to deposit up to $200 instead.
- High credit utilization could hurt your credit score.
This card doesn’t earn any rewards either, which, again, isn’t unusual for secured credit cards. However, you do get a few added features. Similar to Chime’s Credit Builder card, you have access to online and mobile account management, card lock, and account alerts.
The most important thing to remember is that paying your balance in full each month is a must if you want to avoid interest charges.
Chime vs. Capital One: what's the best secured credit card?
The features are important when comparing the Capital One secured card vs. Chime’s Credit Builder Secured Visa® Credit Card. But what’s more important is what you need the card to do for you.
Here’s a side-by-side comparison of the two cards so you can see how they stack up.
|Chime Credit Builder||Capital One Secured Credit Card⁵|
|Minimum Deposit||None³||$49, $99, or $200|
|Initial Credit Limit||Depends on how much you move from your Chime Checking Account||$200, though you may increase that to $1,000 with a larger deposit|
|Foreign Transaction Fee||None||None|
|Minimum Credit Score to Apply||None; no credit check is required||Not specified, but a hard credit check is required|
|Other Requirements||Applicants need a Chime Checking Account and qualifying direct deposits⁴||Not specified, though Capital One asks for income and monthly housing payment information when you apply|
|Builds Credit||Yes, with reporting to all three major credit bureaus||Yes, with reporting to all three major credit bureaus|
So which one should you apply for, Chime vs. Capital One?
The Chime Credit Builder Card can make the most sense if you already have a Chime Checking Account or plan to open one. You don’t need a minimum deposit³ to apply, you don’t need a minimum credit score to qualify, and you don’t have to worry about paying a dime in interest and fees.
Credit Builder aims to help make building credit accessible for everyone. Since there are no fixed spending limits or credit limits, you can decide how much to spend each month. That can make it easier to manage your budget and avoid ending up with a pile of debt.
And if you don’t have a Chime Checking Account yet, you might want to open one to simplify your finances. Chime can help you spend and save in one place, without all the high fees that traditional banks often charge.
So why might someone choose the Capital One Secured Credit Card instead?
You may pick this secured card if you’re already a Capital One customer and comfortable putting up an initial security deposit in cash. Getting an upgrade to an unsecured card later might be appealing if you eventually plan to apply for one of Capital One’s cash back or travel rewards credit cards.
Remember, however, that interest applies with this card when you carry a balance. So unless you’re committed to paying your balance in full each month to avoid those interest charges, you might be better off with a Credit Builder card instead.
The final verdict
Good credit is an essential part of your money management plan. The higher your score, the easier it is to borrow money when you need it and get the best rates for loans or lines of credit. Chime’s Credit Builder card can put you on the path to help build a better credit score. And you can start building credit without any obstacles (or fees) you might run into with other secured credit cards.
Already have a Chime Checking Account? All you need is a qualifying direct deposit to apply for Credit Builder and start safely building credit.