Debit Cards That Build Credit: A Comprehensive Guide

Debit cards that build credit are a great option for people who want to establish or improve their credit score without taking on debt. They work by reporting your payment history to the credit bureaus, just like credit cards do.

Many debit cards that build credit require a security deposit, which becomes your credit limit. For example, the Discover it Cash Back Secured credit card requires a deposit of $200 to $2,500, which becomes your credit limit. This deposit is refundable if you pay your balance in full and close the account.

Having a debit card that builds credit can help you establish a positive credit history, which can be beneficial for future loan and credit card applications. A good credit history can also lead to lower interest rates and better loan terms.

Some debit cards that build credit report to all three major credit bureaus, while others may only report to one or two. For example, the Capital One Secured Mastercard reports to all three major credit bureaus: Equifax, Experian, and TransUnion.

Fees can add up quickly, so it's essential to understand what you're getting into. Some debit cards that build credit may charge out of network ATM fees.

Late payment fees are another thing to consider, and they can vary depending on the card issuer. Always review the Current Deposit Account Agreement for specific details.

You might be able to avoid some fees by using in-network ATMs or making on-time payments.

Freedom from Fees is a welcome relief for anyone tired of paying unnecessary charges. No minimum balance fees mean you won't be penalized for having a lower balance in your account.

You can withdraw cash from any ATM within your bank's network without incurring a fee. This can save you a significant amount of money, especially if you frequently use ATMs.

Bank transfer fees are also a thing of the past with this type of account. This means you can send and receive money without worrying about additional charges.

Annual fees are another expense you won't have to worry about. This can add up to a substantial amount of money over time, but with this type of account, you can keep that money in your pocket.

Here's a quick rundown of the fees you won't have to pay:

When you're using a card or account, you might incur some fees. Some fees may apply, including out of network ATM fees.

These fees can add up quickly, so it's essential to be aware of them. Late payment fees are also a possibility.

For more information on these fees, check out the Current Build Card Rates & Fees and the Current Deposit Account Agreement.

To earn Points with Current, you'll need to make purchases at retailers classified as Dining or Groceries, or complete other actions designated by Current.

Points will be granted for different actions, but the amount and purchase requirements will vary and are subject to Current's discretion.

You'll need to allow 3-5 business days for Points to post to your Current account after qualifying.

Points will expire 365 days after they settle.

Building credit is a crucial aspect of financial health, and using a debit card that reports to the credit bureaus can be a great way to start. You can request your credit reports free of charge every 12 months at annualcreditreport.com.

To build credit, you want to focus on making payments on time, which accounts for a major factor in your credit scores. Having a system in place to remind you of due dates can help ensure you pay your bills on time.

Keeping your credit utilization low is also key, aiming for less than 30% of your available credit. This will help you avoid negatively affecting your scores.

Reading your credit reports regularly is a great place to start building healthy credit habits. You can request your credit reports free of charge every 12 months at annualcreditreport.com.

Make payments on time to help improve your credit scores. Having a system in place, like marking due dates in your calendar or setting reminders on your phone, can help you stay on track.

Keeping your credit utilization low is also important. Aim to use less than 30% of your available credit to avoid negatively affecting your scores.

Avoid opening multiple credit accounts back to back, as this can hurt your credit scores. Instead, focus on building a mix of accounts over time.

Closing old accounts can actually hurt your credit history length, which is an important factor in determining your credit scores. So, try to keep your credit accounts open for as long as possible.

Here are some key steps to building healthy credit habits:

The Experian Smart Money Debit Card is a great tool for managing and improving your financial health. It's connected to Experian's mobile app, which identifies bill payments that could positively affect your credit scores.

The card itself is a debit card, not a secured credit card. It doesn't set aside a secured balance for you to spend. This is a key difference between the Experian Smart Money Debit Card and credit building cards like the Cleo Credit Builder Card.

The Experian Smart Money Debit Card has some fees associated with it. You'll pay $3.00 per ATM withdrawal, unless you use an All-Point ATM, in which case it's free. Foreign transactions will cost you 3% of the transaction amount, or $3.25, whichever is higher.

Here's a breakdown of the Experian Smart Money Debit Card's fees:

Experian Smart Money Debit Card is issued by Community Federal Savings Bank, a Member FDIC bank. This means your deposits are insured up to $250,000, giving you peace of mind.

If you're looking for a debit card that can help you build credit, there are several options to consider.

The Current Build card has no monthly fee and offers a rewards program, making it a great option for those who want to build credit without incurring extra costs.

One of the best things about the Current Build card is that it has no monthly fee, which can save you money in the long run.

The Varo Believe card also offers a no monthly fee option, but it requires you to qualify for the credit builder program.

The Cleo Credit Builder card is an expensive option, with a monthly fee of $14.99, but it offers similar services to other cards on the list.

If you're looking for a prepaid card that can help you build credit, the Sesame Cash Mastercard is a good option, but be aware that it has a foreign transaction fee of 3%.

Here are the key features of the 6 best debit cards that build credit:

The Varo Believe Secured Credit Card is a great option for those looking to build credit. It's directly tied to a Varo Believe Secured Account, which acts as collateral for your card payments.

To qualify, you'll need $200 or more in incoming deposits to your Varo account within the past 31 days. This is a relatively low requirement compared to other secured credit cards.

The Varo Believe Secured Credit Card doesn't have a subscription fee, opening deposit, or APR. This means you won't have to pay any extra fees to use the card, and you won't be charged interest on your balance.

You will, however, be charged a $3.50 ATM fee, unless you use an All-Point ATM, which is free. Overdraft fees and foreign transaction fees are also waived, which is a big plus.

Here's a quick rundown of the fees associated with the Varo Believe Secured Credit Card:

The Varo Believe Secured Credit Card is issued by Varo Bank, N.A., which is a member of the FDIC. This means your deposits are insured up to $250,000.

If you're looking for alternative options to build credit with a debit card, consider the following facts. Some debit cards don't require a subscription fee, such as the Cross River Bank card, which has a $0.00 subscription fee.

The Evolve Bank & Trust or Patriot Bank N.A. cards have a unique pricing model, with a monthly fee of $20-$25 or an annual fee of $149-$199. This is a significant difference from the other cards listed.

If you're looking for a card with no foreign transaction fee, the Varo Bank, N.A. card is a good option, with a 0% foreign transaction fee.

Here's a comparison of the alternative options:

The Community Federal Savings Bank cards have a unique fee structure, with a $9.99/month subscription fee for one card, and a $3.00 ATM fee or 3% foreign transaction fee for the other.

To use a debit card that builds credit, you can start by using your card for everyday purchases, even at the ATM, to build credit with everyday transactions.

You can also earn points and more with your card. The spending limit is determined by the amount you put into a security deposit or reserve account.

Here's how it works: you put money into a reserve account, and then you can use that money to make purchases. This setup makes it nearly impossible to rack up debt.

To make payments, you can enable AutoPay or pay your balance, and we'll report it to both TransUnion and Equifax, building your credit history.

You can also get paid up to 2 days faster when you sign up and set up direct deposit.

If you're thinking about taking out a loan soon, a credit-building debit card could be very worthwhile because it can help you boost your credit score, which in turn can get you a lower interest rate on that loan.

A FICO Score of 700 is generally seen as good, and many credit-building debit cards come with apps that let you track your credit score progress without affecting your score.

The Current debit card is a solid option to consider because it's free and lets you start reporting your responsible payment history.

Boosting your credit score into the 700 range can make a big difference in your financial plans, especially if you're looking to take out a loan for something big like a car, college tuition, or a house.

Your credit score can make a huge difference in the interest rate you're offered on a loan. If you have an exceptional credit score of 750 or more, you could land an APR of under 4%.

A good credit score, above 700, might get you under 6% APR. This can save you a significant amount of money on your loan.

Having a fair credit score, above 650, could get you under 8% APR. This is still a relatively low interest rate, but it's a bit higher than what you'd get with a good credit score.

If your credit score is poor, 649 or less, you could be facing an APR of 13% or higher. This can easily mean over $100 more each month in payments.