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Can You Build Credit with A Debit Card?

Money Management | SouthEast Bank | June 24, 2022

Debit cards cannot help you build credit. Debit and credit cards may seem interchangeable, and to some extent, they can be in their purchasing use, but only one of them helps you build credit: your credit card. 

Even if you use your debit card responsibly, the purchases made with it do not go towards building your credit score. Credit cards, on the other hand, will affect your credit; just make sure you pay them off in time in order to maintain a healthy score (and avoid costly interest!). If you are looking to build credit, here are a few reasons to put down your debit card and pull out your credit card for certain purchases.

Why You Can’t Build Credit with Traditional Debit Cards

Debit cards take money directly from your checking account when you use it to purchase goods or services, and they can also be used to take out cash from ATMs. Using a debit card means you are limited to what you have in your checking account. If you overspend, you will typically be charged an overdraft fee.

Traditional credit cards, like a store credit card or airline miles card, let you buy things on borrowed money, i.e., credit. Depending on the card, there are conditions when you use it, and there will be a limit on how much can be spent based on the credit line you receive. You must pay the money you spent on it back, plus any interest if you’ve accrued a balance. 

As credit cards work by lending you money on credit, using them will impact your credit score. If you pay on time every billing cycle and don’t overspend, it will help to build your credit. Not paying a credit card on time will negatively affect your credit score. Experts recommend that you keep your credit utilization below 30% of your total available credit. For example, if you have a limit of $10,000 on your credit card, you do not want to have a balance higher than $3,000 for a long period of time. 

Your credit card payment history is reported to the three major credit bureaus: Experian, TransUnion, and Equifax. These companies create and maintain your credit report which is used to determine your credit score. You can contact them to see your credit report, or many banks and credit cards are now providing free FICO scores each billing cycle.

Unlike credit cards, traditional debit cards aren’t tied to credit. The money you have in your checking account is the only money you can spend. A debit card is thus effectively the same as using cash from a credit perspective. Your debit card information is not sent to the consumer credit bureaus, so it does not appear on your credit report.

The Benefits of Debit Cards

Although you cannot build credit with a traditional debit card, debit cards do have several benefits. Namely, debit cards are designed to offer easy access to your funds, while keeping your spending in check. In many cases, if you try to spend more than is available in your account, your debit card transaction will be declined, or you'll have to pay an overdraft fee.

In the next section, we'll review a few of the best scenarios for using a debit card.

When to Use a Debit Card

Even if you want to build credit, there are times when you should use your debit card instead.

  • Access Cash Quickly - You can use credit cards to take cash out which is a cash advance, but it’s tied with interest on the transaction and can be very expensive. Instead, use your debit card at an ATM to withdraw cash. If you are using an ATM that doesn’t belong to your bank, you might be charged a small fee, but it will be less expensive than the interest on the cash advance of a credit card.
  • Prevent Overspending and Debt - Using your debit card means you are limited to what’s in your bank account. Even though that new grill might be tempting to buy, you might rethink it if you only have so much in your checking account. It’s easier to overspend with credit cards when you start to think that you can just pay it off later when you might have more money. If you do that a few times too many, you’ll end up with a larger balance than expected, which could negatively impact your credit score, and you could have interest piling up against you.
  • Avoid Interest - Credit cards charge interest on balances that aren’t paid at the end of each billing cycle, and some even come with a yearly fee. Using a debit card avoids that and saves you money unless you overdraw your account.

When to Use a Credit Card

Debit cards are good for avoiding overspending and debt, but they don’t help build your credit score or provide many additional benefits. Credit cards, when used responsibly, can help bolster your financial health and provide you with special perks. Some of the benefits of a using a credit card include:

  • Build Credit Score - The number one reason to use a credit card is to help build up your credit score. By using your card a few times a month and paying off the balance quickly and in full each cycle, you will help to improve your credit score over time. Even if you have poor credit, to begin with, there are credit cards on the market you can apply for that will help you to turn around your credit.
  • Rewards - Some debit cards offer savings when you use them, but it's also important to explore the perks you can get with credit cards. From airline miles to percentages off groceries, gas, or other items, credit card companies draw you in with enticing rewards. These can add up to great savings when you use your card responsibly.
  • Emergency Funds - Having a credit card is helpful for any emergencies that come up, from a new tire to dental work. They allow you to have a large sum of money ready instead of having to dip into your savings account or paying straight from your checking account, leaving you strapped for the rest of the pay period. That said, make sure to pay off your balance as soon as possible to avoid interest or any hits on your credit report.

Ways to Help Build Credit

Building credit or working on improving your credit score can seem daunting at first, but there are a few ways to make sure your credit score is in good shape.

  • Don’t Have Too Many Cards - It’s tempting to apply to every card you get in the mail, but take a moment to consider if you really need it. Do some research on the card and see if it’s one that you really need or will use. Applying for credit cards can affect your credit score; apply to only the ones that you need and check if you are pre-approved first. Having only a few credit cards will help you better manage your balances and avoid overspending.
  • Use Your Cards Responsibly - When you first get a new credit card, read the terms and conditions to understand what you are signing up for. This will help you understand when your due dates are and any fees associated with it. Make sure you are paying your credit cards on time and, if possible, pay more than the minimum amount. Suppose you can pay off the balance in full to avoid a revolving line of credit debt. Finally, try not to use it for every purchase unless you are sure you can pay everything off in time.
  • Become an Authorized User - If you don’t have any credit or your credit is low, try becoming an authorized user on an existing account. Both you and the primary user will have to maintain the card's health and use it responsibly, but it can help build your credit without applying for a new card directly under your name. Just keep in mind that the primary user will have to make the payments on time; otherwise, it could hurt both your credit scores.
  • Pay Off Past-Due Accounts - When trying to improve your credit score, pay off any past-due accounts you may have. Late payments on bills can remain in your credit report for up to seven years, and it will prevent any new ones from being added. Bring all of your accounts up to date to better manage your credit. You will also avoid any late fees, which will help you save money.


Can you build credit with a debit card? Traditionally, no. Building credit starts with a credit card. While debit cards are necessary to have and helpful in many situations, they won’t help improve your credit score as they are tied only to your checking account, and your purchases are not reported to the credit bureaus. 

If you are looking to avoid credit cards but still want to enjoy rewards like cashback, you can explore checking accounts that offer reward debit card transactions. However, it’s often best to stick with the traditional route of separate credit and debit cards to make sure you don’t overspend and keep your finances healthy.


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Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as legal or tax advice. An attorney or tax advisor should be consulted for advice on specific issues.

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