Chime Credit Builder Card is a unique offering from Chime, whose main objective is to help you build your credit score. But can you overdraft money with Chime Credit Builder Card? Read on to find out.
Does Chime Credit Builder Let You Overdraft
No, there is no overdraft service available in Chime Credit Builder Card and you cannot exceed your Credit limit i.e. the maximum amount you can spend based on the funds available in your secured account. However, Chime may on its own discretion, authorize a transaction even if it exceeds credit limit in rare circumstances.
The way Chime Credit Builder card works is that you need to first deposit money in a Chime Credit Builder account which is a secured account, for any amount you intend to spend using your Chime Credit Card. This amount that you hold in this secured account acts as your credit limit i.e. maximum amount available to spend on your credit card. So actually it does not work like a credit card but like a prepaid card. In fact, there is no extra credit offered by Chime as it needs you to pre-deposit any amount (i.e. fully secure your any future liability) even before spending it.
As and when you make purchases using your Chime Credit Card, the balance amount available to spend is updated on the Chime app. At any point of time, you cannot overdraw or exceed the amount available to spend as reflected in your Chime app.
Let’s explain this further with an example:
Say you deposit $50 in your Chime Credit Builder Account. This amount becomes your credit limit and is reflected as the “Amount available to Spend” in the app. Suppose you make a transaction of $30 using your Chime credit card,. Now, the new balance available to spend will be reflected as $20.
If suppose you want to make a further transaction of an additional $30, you can’t do that as it exceeds the current available balance of $20 and you wont be allowed to overdraw$10.
In such cases, you can deposit an additional $10 in your Chime Credit Builder account to increase your secured account balance (or credit limit) back to $30 and then make the transaction.
Or if you are short on funds and want to overdraw , then you can consider using your Chime debit card instead for such transaction, if you have Spot Me activated on your card. Chime Spot Me is the only overdraft product offered by Chime which works on your Chime Debit Card and not on Chime Credit Builder Card. You need to have set up a direct deposit of at least $200 to be eligible for Chime Spot Me. You can check this post which explains in detail on how Chime Spot Me works and its rules.
One possible reason Chime does not allow overdraft facility on its Credit Builder Card is that it may create situations of defaults or adverse impact on a user’s Credit score, if a user overdraws and fail to pay back credit card dues on time. This would defeat the purpose of Chime Credit builder card to help you gain a credit score.
Can Chime Credit Builder go negative
Chime Credit Builder card does not go negative as there is no overdraft facility available on it and you do not exceed the Credit limit. However, Chime may allow you to exceed credit limit in rare cases at its discretion (usually for specific transaction), which can cause a negative balance.
So in the rare possibility that you see a negative balance on your Chime Credit Builder Account, it may be such case. However, do know Chime makes it clear in their terms =that there is no overdraft service being offered or no obligation on their end to allow any amount to be overdrawn in future. Also, you are required to immediately pay back the excess amount or cover the negative balance by funding your secured amount.
So in such situations, it is best that you fund your Secured account to clear any negative balance that you see that my have been caused when Chime allowed to overdraw for a particular transaction. There may not be any overdraft fees or negative impact on your credit score in such cases, considering experience of some Chime users.
But, if you feel that the negative balance should not have been caused in first place or not sure of a transaction, you can reach out to the Chime support team to understand the issue first before taking action. This is especially the case when there is an auto-debit transaction where it is no
Following is the extract from your Chime Credit Builder Terms and conditions that explain this point further.
Error Adjustments: If funds are deposited, transferred, or credited to your Account by mistake or other error, we may correct the situation by deducting the amount of the erroneous deposit, transfer, or credit from your Account without prior notice to you. Such adjustments may also cause you to exceed your Credit Builder Account’s credit limit
If you attempt a transaction that would cause you to exceed your Credit Limit, we may in our discretion authorize the transaction without increasing your Credit Limit or we may deny the authorization. If we do allow you to exceed your Credit Limit at any time, that does not obligate us to do so any other time.
Without limiting our other rights under this Agreement, including our rights under the “Our Rights Upon Default” section, you agree that if you exceed your Credit Limit at any time you will immediately pay us for the full amount of the excess over the Credit Limit, as applicable.
Chime does not overdraft facility on Chime Credit Builder Card, keeping it a focused product to help build your credit score. However, there may be rare situations where your balance may go into negative if Chime allows a transaction to go through on their discretion, which you should fund as soon as possible. If you are looking for overdraft options, you can use Chime Spot Me (if you are eligible and have activated it on Chime app) to overdraw with your Chime debit card. You can also check this post on for cash advance apps that work with chime if you are looking for overdraft or soot me solutions.