How do I borrow money from chime?

Chime is an online financial services company that offers banking services through a mobile app. One of the services they provide is the ability to borrow money through a line of credit called SpotMe.

What is SpotMe?

SpotMe is Chime’s no fee overdraft service. It allows you to overdraw your account up to $200 on debit purchases with no overdraft fees. The overdrawn amount is then paid back when you make deposits into your Chime Spending Account.

Basically, SpotMe gives you a short-term line of credit that can protect you from overdraft fees when you make debit card purchases. You don’t have to apply or be approved for SpotMe, it’s automatically available for eligible Chime members.

How does SpotMe work?

Here’s a quick rundown of how SpotMe works:

  • Make a debit card purchase that would overdraw your account by $200 or less. SpotMe covers the amount so your purchase is approved.
  • You have up to 30 days to deposit enough money into your account to return your balance to $0 or higher.
  • There are no fees, interest charges or credit checks associated with SpotMe. As long as you repay your negative balance within 30 days, you won’t be charged anything.
  • SpotMe is only available for debit card purchases. ATM withdrawals, Pay Friends transfers, Check writing and other types of transactions are not eligible.
  • Your SpotMe limit starts at $20 when you first open your account and can increase up to $200 based on your account activity and direct deposits.

In a nutshell, SpotMe allows you to safely overdraft up to $200 on debit card purchases with no fees. It acts like an automatic 0% interest short-term loan that helps you avoid costly overdraft charges.

How do I qualify for SpotMe?

To qualify for SpotMe, you simply need an open Chime Spending Account. There is no formal approval process or credit check needed. However, there are a few requirements to use SpotMe:

  • You must have regular monthly direct deposits of at least $200 into your Chime Spending Account.
  • Your account must be at least 30 days old.
  • You need to be enrolled in payroll or government benefits direct deposits.
  • Your account must be in good standing without any flags for suspicious activity.

As long as you meet those requirements, your account will automatically come with a $20 SpotMe limit to start. This can increase up to $200 over time with consistent direct deposits and account activity.

How do I increase my SpotMe limit?

Your initial SpotMe limit will start at $20 when you open your account and set up qualifying direct deposits. Over time, this limit can increase incrementally up to $200 based on the following factors:

  • Frequency and amount of your direct deposits
  • Length of time your account has been open
  • Spending activity and on-time repayments
  • Credit profile maintained by Chime based on your account history

In most cases, if you continue using your Chime account responsibly your SpotMe limit will reach $200 within 12 months. The increases happen automatically based on an internal formula used by Chime.

Here are some tips that may help boost your limit faster:

  • Set up recurring direct deposits, like paychecks or government benefits, for at least $200/month.
  • Avoid overdrawing your limit frequently or keeping a negative balance.
  • Deposit funds promptly after using SpotMe to repay your balance.
  • Use your Chime debit card regularly for purchases.
  • Maintain a positive account balance when not using SpotMe.

The more active and in good standing your account, the quicker your limit is likely to reach $200. But keep in mind the increases are gradual and personalized based on your usage and history.

How do I pay back SpotMe?

Any SpotMe overdraft amounts must be repaid within 30 days. Here are the ways you can deposit money to cover a negative balance:

  • Direct deposit: Set up recurring payroll, benefits or other deposits. When money is deposited it will automatically repay SpotMe first.
  • Cash deposit: Transfer money at a Green Dot retailer, bank or ATM that accepts cash loads.
  • Check deposit: Use the Chime mobile app to take a picture of a check payable to you.
  • Account transfer: Instantly move money from another bank account via ACH transfer.
  • External Pay Friends transfer: Friends can transfer you money via Pay Friends if they have an eligible debit card.

As soon as any money hits your Chime Spending Account, it is automatically applied towards your negative balance before anything else. So the easiest way to pay back SpotMe is through direct deposit. Just make sure enough money is deposited to cover the full negative amount within 30 days.

What are the costs and fees?

The big benefit of SpotMe is that there are no fees or interest charges for using it. Here are the key things to know:

  • There is no cost to enroll in SpotMe and no impact to your credit.
  • No interest, fees or transaction charges for using SpotMe.
  • No overdraft fee as long as you repay within 30 days.
  • No fee if your payment is late returning your balance positive.
  • No costs to increase your SpotMe limit.

The only potential fees are:

  • If you fail to repay your full SpotMe balance within 30 days, your limit is reduced to $20.
  • A $15 failed payment fee may apply if repayment attempts fail.

So as long as you repay on time, there are no costs to use SpotMe as an occasional safety net. It provides fee-free overdraft protection up to your limit.

What are the alternatives to SpotMe?

Some alternatives to consider instead of using SpotMe include:

  • Savings buffer: Maintain a buffer of savings in your Chime Spending Account to cover occasional shortfalls.
  • Overdraft Protection Transfer: Link a Chime Savings Account to automatically transfer money when your balance is low.
  • Pay Friends: Request money from friends via Pay Friends if you are short on funds.
  • Overdraft line of credit: Apply for an overdraft line of credit from another provider like a bank.
  • Payday advance apps: Services like Earnin and Dave let you advance a portion of your paycheck.

The downside is most of these options come with fees, interest charges or limits on the amount you can access. SpotMe provides fee-free overdraft protection up to $200 as a helpful safety net.

Pros of using SpotMe

Here are some of the key benefits of using SpotMe as an occasional funding source:

  • No fees: SpotMe helps you avoid expensive overdraft fees from banks.
  • Fast access: Money is instantly available to complete debit purchases.
  • Easy to qualify: No credit check or application needed if you meet basic requirements.
  • Grows over time: Your limit can increase up to $200 as your account matures.
  • No interest: 0% APR so it’s a cost-effective way to borrow.

Cons of using SpotMe

There are also a few drawbacks to keep in mind with SpotMe:

  • Repayment required: The money must be paid back within 30 days.
  • Credit reporting: Frequent use and failed payments could negatively impact your credit.
  • Lower initial limit: The max is just $200 and starts much lower.
  • Debit only: SpotMe can only cover debit card purchases, not other transactions.
  • Bank rejection: Your bank may decline ACH or card transactions if Chime rejects a debit.

While SpotMe can be a helpful backup funding option, it’s best used occasionally versus as a long-term financing solution. Make sure you have a plan to promptly repay your balance.

Tips for using SpotMe

If you plan to use SpotMe as a backup source of funds, keep these tips in mind:

  • Check your SpotMe limit regularly in the Chime app so you know how much you have available.
  • Only use SpotMe for important, necessary purchases you can repay quickly.
  • Have a plan to repay the money through direct deposit or transfers within 30 days.
  • If your purchase is denied, your limit may have decreased or you’ve hit the max.
  • Avoid maxing out SpotMe frequently, as declined transactions can impact your access.
  • Keep track of your balance and repayments needed in the Chime app.

Used responsibly, SpotMe can provide peace of mind. But it’s designed as a temporary backup versus a recurring source of financing. Understand the limits and risks before relying on it too heavily.

Can I lose access to SpotMe?

In some cases, your access SpotMe can be limited or suspended if:

  • You fail to repay your negative balance within 30 days multiple times.
  • Your account has a negative balance for more than 30 days.
  • Repeated transactions are denied because your limit is exceeded.
  • Suspicious, fraudulent or account abuse activity occurs.
  • Your qualifying direct deposits stop.
  • You close your Chime Spending Account.

Essentially, Chime wants to see SpotMe used responsibly and repaid on time. If not, they reserve the right to limit your access to protect themselves against losses.

If your access is restricted, you will need to bring your account balance positive, reestablish qualifying direct deposits, and demonstrate responsible use in order to have it reinstated.

Can SpotMe hurt my credit?

Using SpotMe itself will not directly hurt your credit. It does not require a credit check, is not reported to the credit bureaus as a loan, and has no fees or interest charges.

However, how you use and repay SpotMe can indirectly impact your credit over time. Here are some risks:

  • If you frequently fail to repay on time, Chime may report your account to ChexSystems which could make it difficult to open accounts.
  • Regularly maxing out your limit could lead Chime to close your account, which negatively impacts your credit utilization.
  • Missed repayments could be sent to collections eventually, hurting your credit score.

So while SpotMe itself poses little immediate credit risk, ongoing irresponsible use resulting in account closure or collections could over time negatively show up on your report.

Conclusion

SpotMe provides a convenient, fee-free way to access short-term funds in a pinch. It can protect you from costly overdraft charges. But relying too heavily on SpotMe as credit can be risky if you cannot consistently repay on time.

Use SpotMe only as an occasional backup for unavoidable overages. Have a plan to promptly deposit money to cover any negative balance incurred. This will keep your account in good standing and limit risks from missed payments down the road.

SpotMe is a helpful service when used mindfully. But approach it with caution, understand the limitations, and take steps to not become dependent on having that overdraft buffer indefinitely.

Leave a Comment