Traditionally, debit and prepaid cards don’t build credit history. But if you don’t want to go with a traditional credit card to improve your credit, there are unique secured card options to check out.
No, regular prepaid debit cards don’t build or establish credit history. Prepaid cards aren’t a form of credit so they’re not added to credit reports. The term “prepaid credit card” is being used to describe some secured credit cards with reloadable deposits, making them similar to regular prepaid cards in that you can only spend what you’ve deposited in the linked account.
We don’t want to get too bogged down in semantics, but technically, prepaid credit cards don’t exist. Normally, prepaid cards are just reloadable cards that are not tied to a line of credit.
But hold up — there are secured cards that function similarly to debit and prepaid cards that can help build credit history.
Some fintechs, like Chime, Extra and Cleo, offer secured credit cards that function a lot like prepaid cards that report payments to the three major credit bureaus.
These “prepaid credit cards” or “debit-credit cards” don’t charge interest because they require you to pay off your balance every month. They are usually linked to an external bank account and you can borrow up to your linked account balance, and then repaid from your account balance. Payments are then reported for credit building. These “prepaid credit cards” often don’t have interest charges and skip the hard credit check, making them solid options for people who want to build credit history.
Credit building for young adults
On Step's secure site
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On Current's secure site
Cash advance available
On Cleo's secure site
One of the best benefits of secured cards is the opportunity to build a better credit history, and usually, it also means fewer fees than traditional credit cards.
There aren’t many downsides to these unique secured cards, as many of them lack interest charges, late fees and hard credit pulls.
But just like any form of credit, there’s still some risk of harming your credit history. Late payments and high utilization ratios can 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.
Keep these in mind while compared secured card options:
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.
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 prepaid credit cards don’t require a hard credit pull, so your credit history may not be a factor at all during the application process.
But count on needing a security deposit or a linked bank account to qualify for a prepaid credit card. And they won’t build credit on their own — you may 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.
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 |
Most methods of credit-building involve taking on credit — personal loans, credit cards, auto loans and so on — and those tend to include interest charges. If you want to build credit for free, there are a few secured cards with no monthly or annual fees, and some free rent reporting services.
Don’t need a prepaid card that builds credit? Compare regular prepaid cards instead.
The Finder Score applies to 45+ kids' debit card options. It takes into account the card's fees, features, age requirements, ATM access and more — this gives you a simple score out of 10.
To provide a Score, we compare like-for-like debit cards. So if you're comparing the best kids' cards with no monthly fees, you can see how card stacks up against each other by features, opening deposits and other benefits.
Confused by credit scores and how they work? Here’s a simple, no-nonsense explanation of credit scores; including how to improve it.
See a side-by-side comparison of the best credit monitoring services that track your credit report activity and alert you of changes.
Kikoff has a lot of credit-building services; see how it compares to alternatives like Self, Cleo, Grow Credit and OnePay.
The best credit-building apps include Self, Kikoff, Step, Cred.ai, Cleo and Kovo. Compare the best options here.
See a breakdown of how Finder awards our unique star ratings to credit-building products we review and compare.
Kikoff offers several credit-building products, including a tradeline that pays for your membership fee, rent reporting and a dispute tool.
Designed for credit-newbies, StellarFi offers three credit cards, which can be secured or unsecured. See our full breakdown of offerings.
Credit-builder loans improve your credit score with payments into a savings account. Self, Ava and MoneyLion are top examples.
These rent and utility reporting services report rent and bill payments to credit bureaus to help you build credit without a credit card.
Step banking accounts help kids and teens learn to manage their money while building their credit scores.
