Bob HatchTypically, you can’t build credit with a debit card. That’s what credit cards are for. Debit cards are actually meant for withdrawing cash from an ATM, and paying for stuff online or at a store.
That being said, some relatively new credit cards now allow users to build credit while still possessing the regular debit card functions.
To find out how these credit-building debit cards work and which debit cards allow you to build credit, continue reading.
How Do You Build Credit With a Debit Card?
From a rational point of view, it’s unlikely that one would be able to build credit with a debit card. But these new credit cards are changing the narrative and making the idea possible.
What these cards do is a link directly to your existing bank account and include a layer for credit building. This gives you a one-day credit window, so, when you make a purchase, the debit card company loans you the money and then reimburses themselves from your account after 24 hours.
Your account balance determines your credit limit unless you choose to make your limit lower. The issuer of your credit-building debit card reports your credit history to the credit bureaus and that builds up your credit score.
3 Best Debit Cards for Building Credit
- Extra debit card
Extra Debit Card is the pioneer of credit-building debit cards. They offer all the regular features of a debit card plus credit-building features.
The Extra debit card has over 10,000 banks in its United States network. It links to your regular bank account and allows you to build credit.
Customers receive a 1% reward for everyday purchases, which they can cash in for gift cards and other items on Extra’s reward store.
- Sesame Cash Debit Card
Sesame cash debit card works a bit differently. Here, your account balance does not determine your credit limit, rather you allocate a certain amount of money every month as a deposit for a secured virtual credit card.
Each time you make a debit card purchase, the exact amount is created on your secured virtual credit card which is used to cover the cost. Sesame cash does not have hidden charges.
- Sequin Debit Card
Sequin is relatively new in the credit-building business. It is a gender-based credit-building debit card for women folk, created also by women. Because women usually receive lower credit limits on their credit accounts, the goal of Sequin is to help women build credit by offering them credit for every purchase they make with their debit cards.
Sequin works just like Extra. It funds your debit purchase and reimburses itself after a day or so. It comes with no interests or hidden charges.
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