Debit cards are useful for making regular purchases, direct deposits, and keeping track of your spending through online banking. But they don’t help improve your credit score. That’s where credit-building debit and secured cards prove valuable, offering a safe way to build a positive credit history.
How do credit-building debit cards work?
Credit-building debit cards, like the Extra Debit Card, are like a debit and credit card hybrid. They’re basically an alternative secured credit card but with a different security deposit and additional benefits.
Unlike traditional secured credit cards, which rely on a security deposit that sets your credit limit, credit-building debit cards are secured by a linked bank account, with the card’s credit limit determined by your account balance. When you use the card, the amount is borrowed and later paid back from your linked account balance. These payments are reported to the credit bureaus to help you build a positive credit history.
Most credit-debit cards don’t require a credit check and don’t charge annual fees or an APR like a traditional credit card. They might also come with extra perks like rewards or savings features.
Extra is a fintech company with banking services backed by its partner banks Evolve Bank & Trust and Patriot Bank, N.A. The Extra Card is a credit-building debit card that works by connecting the card to your existing bank account. The Extra Card's spending limit is based on your linked bank account balance, called your Spend Balance. When you use the card, Extra 'spots' you for the purchase, and then it pays itself back the next business day with your linked bank account.
At the end of the month, Extra totals up your transactions and reports the payments to Experian and Equifax, which help build your credit history. But it's not free. You'll choose between two plans: Credit Building and Credit Building + Rewards, costing between $149 to $199 annually or $20 to $25 monthly.
Pros
No credit check and no APR
No opening deposit requirement
Reports to Experian and Equifax
Cons
Fees range from $149 to $199 annually or $20 to $25 monthly.
Step is a mobile-first banking app with a free credit-building secured card. Step helps to build credit by automatically paying off balances each month with funds held in the attached deposit account and reporting it to the credit bureaus. There's also no credit check, no APR or monthly fees. Similar to other secured cards, the Step Card only allows you to spend up to the amount in your deposit account.
Minors can also build credit with Step, though they won't start building credit until they turn 18 years old and opt in to it. Once they opt in, the last two years get reported to the three major credit bureaus.
Pros
No monthly fees or APR
No credit check
Reports to all three credit bureaus
Open to all ages
Cons
Must be at least 18 to gain credit history
No customer phone line
APY
5.00% on balances of $0 to $250,000 5% savings reward with $500+ in direct deposits.
Varo is an online, FDIC-insured bank offering the Visa Varo Believe card that's designed to help you build a better credit score. You can set your own spending limit and enjoy no interest and no monthly fees. Varo states all credit histories are accepted, and there's no hard credit pull or minimum security deposit.
It works like this: If approved, you'll get a Varo Believe Secured Account, which is a deposit account that acts as security for your monthly Varo Believe Card payment. You transfer funds into the Varo Believe Secured Account, and the funds in the account sets your spending limit. Then you use the card, and with Varo SafePay on, Varo automatically covers purchases every month using funds from the Secured Account. The payments are then reported to all three credit bureaus. Any unspent amount in the Varo Believe Secured Account remains available to spend into the next billing cycle.
With no fees and APR, it's a solid way to start safely building your credit history. However, Varo has spending limits, and you can only move money into the Varo Believe Secured Account from your Varo Bank Account — so a Varo Bank Account is required to get the Believe Card.
Pros
Reports to all three credit bureaus
No APR and no monthly fees
No hard credit pull
Cons
Requires Varo Bank Account
Up to $2,500 purchases per day
Up to $1,000 for cash advances
APY
5.00% on balances of $0 to $5,000 (with direct deposits of $1,000+) 3.00% on balances of $5,000+
Intro or bonus offer
Existing and new customers get a $25 referral bonus when signing up for a Varo Bank account. T&C apply.
Rewards
Get up to 6% Cashback when you use your card with select brands
The Fizz debit card can help build your credit score, has no APR and requires no credit check. It's designed with college students in mind, but it's open to everyone. It connects the Fizz debit card to an existing bank account, which determines your spending limit and adjusts daily based on your balance. The card's outstanding balance is repaid automatically with your linked bank account, and Fizz reports payments to all three major credit bureaus: Equifax, Experian and TransUnion.
And unlike most traditional debit cards, the Fizz debit card comes with cashback rewards — something we typically see with regular credit cards. When you spend with participating merchants and build up at least $5 in rewards, you can transfer the rewards to your linked bank account.
Pros
No monthly fees, credit check or APR
Balance repaid automatically
Cashback rewards program
Reports to all three major credit bureaus
Cons
Requires iPhone with iOS 12.0 or later
Requires existing bank account with at least $150
APY
N/A
Intro or bonus offer
Earn 1,000 points ($10 value) when you download the Fizz app and enter code FINDER.
Rewards
Earn 1,000 points ($10 value) when you download the Fizz app and enter code FINDER
Cleo is a modern financial app offering credit-building opportunities with its Credit Builder Card. Like other secured cards, it requires an opening deposit but it can be as low as $1. Deposit as little or much as you want to adjust your spending limit at any time. There's no credit check when you apply, no interest charges because you must repay your balance each month, and Cleo reports to all three major credit bureaus to help you build credit. Plus, consider Carefree Credit Building which is an optional feature where your deposit repays your balance at the end of each month. To get the card, you need the Credit Builder membership for $14.99 per month, but the membership also offers cash advances, cashback rewards, an AI chatbot to praise or roast your spending habits and much more. While there's no way to avoid the membership fee, it's a flexible secured card that doesn't require hundreds to get started.
The credit bureau Experian is offering a new digital account called Experian Smart Money with its FDIC-insured banking partner Community Federal Savings Bank. There are no monthly fees to use the account or debit card. The shining star of this account is the fact that it works in tandem with Experian Boost, which scans your previously non-reported bill payments — such as utility bills or rent — and adds them to your Experian credit file to help you build a credit history. When you link the account to Experian Boost, you can gain credit history by paying eligible bills with the debit card. You'll also get access to 55,000 free ATMs worldwide, early direct deposits, a virtual and physical debit card. The account requires an Experian membership, but luckily, that membership can be free.
Pros
No monthly fees
Works with Experian Boost
Large 55,000 ATM network
Cons
Requires Experian membership
Bills must be eligible for Experian Boost to gain credit history
APY
N/A
Intro or bonus offer
Get a $50 bonus if you deposit at least $1,000 in direct deposits within 45 days of opening the account
Chime is a fintech company with banking services through its partners, The Bancorp Bank, N.A. and Stride Bank, N.A. Chime offers many banking products, including its Credit Builder card, which is a secured credit card. While not an actual debit card, it has no credit check, no annual fees or APR. You must move money from your Chime account over to the Credit Builder card to determine the spending limit — similar to a security deposit requirement with other secured cards. When you use the card and pay off the outstanding balance, the payments are reported to all three credit bureaus: Experian, Equifax and TransUnion.
The Credit Builder card is designed to link with the Chime Checking Account, so to qualify, you must have a Chime Checking account and make qualifying direct deposits of at least $200.
Pros
No credit check or annual fees
Reports to all three credit bureaus
No minimum security deposit
Cons
Requires a Chime Checking account and direct deposits
Chime is a financial technology company, not a bank. The secured Chime Credit Builder Visa® Credit Card is issued by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see the back of your card for its issuing bank. To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Chime Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits. Money added to Credit Builder will be held in a secured account as collateral for your Credit Builder Visa card, which means you can spend up to this amount on your card. This is money you can use to pay off your charges at the end of every month. *Out-of-network ATM withdrawal and OTC advance fees may apply. View the Bancorp agreement or Stride agreement for details; see back of card for issuer.
Current is a fintech company with banking services provided by Choice Financial Group and Cross River Bank. The Current Build card is a secured, credit-building charge card. To get the Current Build card, you must have a free Current account, which comes with savings pods, early payday and more. The Build card is attached to the Current account, and the card's spending limit is based on what you deposit in your account. Payments are reported to TransUnion to build credit history. There's no credit check to apply, and no interest charges or annual fee. While there aren't any daily fees or an APR you have to worry about, know there is a 3% late fee if you're late on a payment.
Pros
No monthly fees or APR
No hard credit check
Up to 15x in cashback rewards
Three savings pods
Cons
3% late fee
Only reports to TransUnion
$3 plus 3% on international ATM withdrawals
APY
4.00% on balances of $0.10 to $2,000 4% bonus on up to $2,000 in each savings pod with direct deposits. Up to $6000 total..
Credit Sesame is a fintech company offering a prepaid debit card called Sesame Cash, which is backed by Community Federal Savings Bank (CDSB). To start building credit, you must open a Sesame Cash account and sign up for the credit builder product. When you move cash into credit builder, it becomes the security deposit for a virtual Secured Credit Card. Plus, you set the utilization ratio. For example, if you deposit $500 and you want the ratio to be 30%, it's a maximum of $150 with the credit builder account.
Once it's set up and you make purchases with the debit card, Credit Sesame looks for purchases that fit within the credit utilization ratio you set. An amount equal to the outstanding balance is set aside in your Sesame Cash account so you can pay off the balance each month. Sesame also offers automatic pay, so the balance is paid on time and in full each month. Sesame states they report to 'the major credit bureaus' but doesn't say which ones.
Sesame Cash costs $9.99 per month, and there's also a $3 inactivity fee. To waive the monthly fee, you must set up a deposit of at least $500 per month or spend at least $1,000 per month with the Sesame Cash account. To avoid the inactivity fee, there must be monthly movements or purchases at least once within a 30-day rolling period. The inactivity fee and monthly fee are waived for the first month.
Pros
No APR
Automatic payments available
Set your own utilization ratio
Card offers cashback rewards
Cons
$9.99 waivable monthly fee
$3 inactivity fees
Not clear which bureaus it reports to
APY
N/A
Rewards
Cash back requires the activation of any active offer before payment is made and depends on geographic location
Fee
$9.99 per month
To waive the fee
Must set up a deposit of at least $500 per month or spend at least $1,000 per month with the Sesame Cash account
ATM transaction fee
$0
Foreign transaction fee
0%
Overdraft fee
$0
Fee
$9.99 per month
Minimum deposit to open
$0
verified_userFDIC Insured
Benefits of credit building debit cards
One of the best benefits of credit-building cards is the opportunity to build a better credit history, and usually, that means fewer fees than traditional credit cards.
Usually no APR. Most credit-debit cards don’t charge interest.
Fewer fees. Unlike credit cards, most credit-building debit cards don’t charge annual fees — and many don’t charge monthly maintenance fees either.
The account is secured. Most have some type of security, whether it be a linked bank account or a security deposit, making them a safer way to borrow due to the lower risk of accumulated debt you can’t repay.
No credit check. The majority don’t require a hard credit pull, and if they do, the requirements are easier to meet than traditional credit cards or loans.
Credit-building loans create a nest egg. These products are like savings accounts that you’re required to contribute to, and once the term is up, you get access to the funds.
What to watch out for
Credit-building products are considered safer than traditional borrowing methods, but with that safety comes some downsides.
Low spending limits. Because these credit-building debit cards often require a security or deposit, the spending limits are typically much lower than traditional credit cards.
Often requires linked bank accounts. Most require you to link an existing bank account, and most require you to open a specific checking account to qualify.
Check where they report. Some credit-building products don’t report to all three credit bureaus. For example, Affirm only reports payments to Experian.
Credit building loans take time. Unlike traditional installment loans, credit-building cards with loan installments won’t let you access funds until the term is over.
Who are credit-building cards best for?
Credit-building debit cards are best for anyone who wants to start improving their credit history, and many are often designed for college students or young people who are new to borrowing. Most of these debit-credit cards don’t require a hard credit pull, so your credit history isn’t a factor during the application process.
But you’ll need a security deposit or a linked bank account that’s funded for credit-building debit cards to actually work. They won’t build credit on their own — you have to use the card so that repayments get reported to the credit bureaus.
These cards aren’t designed for large purchases, earning cashback rewards or emergencies. They’re not made for seasoned borrowers who already have regular credit cards, either. If you’re a student in need of a regular credit line, but your credit score isn’t up to par, consider looking at student credit cards instead as they tend to have more lax credit score requirements than regular credit cards.
How credit-building cards compare to traditional cards
Both can help you build a credit history, but overall, debit-credit cards are likely to have fewer fees.
Type of card
Credit check
Charges interest
Annual fee
Late fees
Credit-building debit cards
Rarely
No
Rarely
Rarely
Secured credit cards
Yes
Yes
Usually
Usually
Unsecured credit cards
Yes
Yes
Usually
Usually
What’s the catch?
There aren’t many downsides to debit-credit cards. Many of them lack interest charges, late fees and hard credit pulls. Credit-building debit cards are worth it if you want to build your credit score.
But just like other borrowing options, credit-building credit cards could still harm your credit. While they don’t usually charge late fees, a late payment can be reported to the credit bureaus and harm your credit score. While they’re called credit building products, it’s up to you to maintain a positive payment history to actually improve your credit score.
Building credit takes time — often years of hard work. While credit-debit cards can help push you in the right direction, they’re also not the only way to boost your credit history — see more tips on how to build your credit.
Bethany Hickey is a personal finance writer at Finder, specializing in banking, lending, insurance, and crypto.
Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance, GOBankingRates, SuperMoney, AOL and Newsweek. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt.
Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others.
Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine.
Here’s how we rate credit building accounts, covering what we look for in credit score requirements, fees, credit reporting practices, customer service APR and account features.
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