Person holding a debit card beside their laptop

Can You Build Credit With a Debit Card?

The question of the century! Why is all this finance stuff so confusing? 

Debit and credit cards are both important financial tools, but they’re very different from each other and what happens with one really doesn’t have much bearing on the other (despite what that random post on Instagram told you). 

Let us explain. 

Do Debit Cards Affect Your Credit Score?

Not until now, thanks to EXTRA! It used to be that one of the only ways to build credit when you had literally no credit history was to get a secured credit card. Those require a security deposit, have really high interest rates (up to 17%), actually have limited credit impact, give you no reward points and do a hard credit check. 

Over here? None of that nonsense. With EXTRA, you build credit without a deposit, worrying about interest, actually get a real impact on your credit report, and don’t have to worry about a credit check. Oh, we give you super rare debit card points too that you can use for rewards in our store. 

How do we do it? 

When you sign up for EXTRA, you connect your bank account and we give you a spending limit based on your bank balance with, you guessed it, no credit check. As you make purchases with your EXTRA card, we spot you for the bill and then pay ourselves back the next business day automatically. At the end of the month, we tally up all the purchases you made with EXTRA and report them to the credit bureaus as credit worthy payments. 

Confused? Let’s Break Down the Difference Between Your Credit and Debit Cards a Bit More


When you use a credit card, that activity is reported to a credit bureau that determines your credit score and keeps track of your credit report. Also, when you use a credit card you’re borrowing money against a loan that you’ll have to pay back eventually. 

When you use a debit card though, you’re spending the money that’s already in your bank account. Meaning you have to say bye, bye to those dollars immediately.

And by the way, clicking “credit” when you’re swiping your debit card doesn’t help you build credit. It just delays the bank taking the money out of your account for a few days. But don’t worry, we’ll share some ways to build credit (keep reading). 

You see, your credit card and debit card are totally different. So you can use them to your advantage in different situations. 


A credit card vs a debit card

When Should You Use A Credit Card?

Use a credit card when you want to: 

#1. Improve your credit score 

Just make sure you keep your credit utilization ratio low (like below 30%). What's credit utilization? It’s how much you’re using of the total amount of credit available to you. So if you have a credit card limit of $100, you don’t want to spend more than $30 bucks of that credit allowance. 

#2. Avoid Overdraft Fees

Don’t spend over your credit limit and you won’t have to worry about overdraft fees. If you only have $500 in your bank account and the shoes cost $550, put them on your credit card so you don’t overdraft your bank account and end up spending $587 because you got charged a $27 overdraft fee. 

#3. Earn Points 

We all love rewards and credit card points can be a great way to get them. A lot of credit card issuers will offer reward points on your purchases that can be redeemed for cash back, airplane miles, and more. 

When Should You Use A Debit Card? 

Use a debit card when you want to: 

#1. Avoid Being Charged Interest 

Because the money you spend when you swipe your debit card comes out of your account immediately, you don’t have to worry about being charged interest on your balance. Because...there is no balance. 

#2. Avoid Debt

Since you’re not borrowing money when you use your debit card, you don’t have to worry about spending more than what you can afford to pay back and going into debt. (Unless of course you overdraw your account and end up owing your credit union overdraft fees—try and avoid that). 

#3. Stop Overspending

You can’t spend more than what you have when you use a debit card so you’ll be able to actually live within your means. 

How to Start Building Credit

Like we said, credit and debit cards are both valuable financial tools when you use them to your advantage. If you’re just starting out on your credit journey, here are some ways to build credit.

#1. Become an Authorized User 

If a family member or close friend has a good credit score, ask them if you can be put on their account as an authorized user. You’ll get a credit card on their account and be able to make purchases without being legally responsible for the bill. As long as your family member or close friend uses their credit card responsibly while you’re an authorized user, you’ll benefit from their good credit history while building your own.  

#2. Pay Your Loans Back 

Your payment history plays a big factor in your credit score. For that reason, you always want to make sure you pay any loans back. (We’re looking at those student loans you’ve been ignoring as you wait for loan forgiveness to finally be a thing).

Your credit card isn’t the only type of credit that shows up on your credit report, so make sure you stay on top of your payments for all the lines of credit you have open like your car payment, mortgage payment, etc. 

#3. And Use Extra

We’re the first debit card that helps you build or improve your credit. 

So, it looks like you actually can build credit with a debit card. As long as your debit card is EXTRA.


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