Can You Build Credit With a Debit Card?
5 Min Read | Published: August 30, 2024
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
Using a debit card typically can’t help you establish or improve your credit score. Learn strategies you can use to help build credit instead.
At-A-Glance
- A debit card typically doesn’t have any impact on your credit.
- To build your credit, you can consider becoming an authorized user on someone else’s credit card or taking out a secured credit card or credit-builder loan.
- Be sure to track your credit score and reports regularly to keep on top of your credit.
If you use a debit card to cover your expenses, you may be wondering how it affects your credit. Contrary to popular belief, a debit card won’t help you build your credit, but the good news is there are other ways to establish credit and set yourself up for better financing opportunities and lower interest rates in the future. Below, we’ll dive deeper into how a debit card could impact your credit, and the steps you can take to help improve your credit over time.
Can You Build Credit With a Debit Card?
In most cases, using a debit card won’t help you build credit. This is because, with a debit card, you’re simply using your own funds rather than borrowing money and repaying it as you would with a credit card. Most debit card transactions aren’t reported to the major credit bureaus, including Experian®, Equifax®, and TransUnion®.1
One exception to this is if you go into overdraft with your checking account. As long as you repay the money you’ve borrowed, you should be fine. However, if you don’t repay and your debts get sent to collections, then that could go on your credit report and may have a negative impact on your score.2
Alternative Ways to Help Build Credit
While a debit card won’t help you build your credit score, don’t worry! There are a number of ways that you can build credit over time.
- Become an Authorized User
If you become an authorized user on a trusted friend or family’s credit card account, you can improve your credit, assuming they already have a strong credit profile and the account remains in good standing. While you won’t have to make repayments as the primary account holder will be responsible for them, the account will be added to your credit history if the card issuer reports authorized-user accounts to the credit bureaus.3 - Consider Opening Up a Secured Credit Card
Although it can be a challenge to get approved for a traditional credit card with no credit or poor credit, a secured credit card may be an option. With a secured card, you pay a deposit that’s usually equal to your credit limit. Then, you use the card to make payments and cover transactions. If the credit card company reports your payment history to the credit bureaus, this could give you a chance to build your credit.4
- Explore a Credit-Builder Loan
A credit-builder works in the opposite way of a traditional loan. First, you make fixed monthly payments so that your credit card issuer can report them to the credit bureaus. After your loan term comes to an end, you’ll typically receive your money back and may get some interest back as well. Most credit-builder loans range from $300 and $1,000.5
Did you know?
A rent-reporting service that reports your rent payments to the credit bureaus can be another way to build credit.6
Keep an Eye on Your Credit
It’s important to keep a close eye on your credit report and score. This way you’ll always know where you stand and whether you need to improve your credit. With American Express® MyCredit Guide, you can get your credit score and report for free. Monitoring your credit can also help you to spot any potential errors on your report, which may be impacting your credit. If you do notice any mistakes, you can contact the relevant credit bureau to get them resolved.
Frequently Asked Questions
You can use your credit card like a debit card, in that you can ensure that you pay off all the charges on time each month. This strategy can help you avoid interest charges and late fees, and may also positively impact your credit score.7
Whether a credit card or debit card is better depends on your unique situation and goals. Both typically offer online access and tools that make budgeting easy as well. However, if you want to build your credit and earn rewards, you’ll want to consider a credit card.
As with debit cards, prepaid cards typically won’t help you build credit. They’re similar to debit cards or gift cards and don’t require you to borrow money as you would with a traditional credit card.
The Takeaway
In most cases, a debit card won’t allow you to build credit. If you’d like to establish credit, however, there are other ways to go about doing it. This includes becoming an authorized user on someone’s account or taking out a secured credit card or a credit-builder loan. It’s also a good idea to regularly monitor your credit, that way, you’ll know exactly where you stand.
1,3,4,6 “Can You Build Credit With a Debit Card?,” Experian
2 “Does an Overdraft Affect Your Credit Score?,” Experian
5 “How to Build Credit Without a Credit Card?,” Bankrate
Anna Baluch is a personal finance writer from Cleveland, OH. She enjoys helping people from all walks of life make smart financial decisions. Her work can be seen on Credit Karma, Forbes, LendingTree, Insurify, and many other publications. Connect with Anna on LinkedIn.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
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