Debunking Credit Card Myths: Are Debit Cards Better for Your Credit History?

no wonder credit card travel rewards is a popular topic of discussion here at TPG. By opening and using them strategically, you can earn big signup bonus and add points in a variety of everyday spending categories, unlocking great rewards like luxury flights and luxury hotel rooms.

However, there are some misconceptions when it comes to credit cards, so today we will continue our series on credit cards. debunk these myths and allows you to start planning your next vacation.

Today, we’re debunking a common myth when it comes to debit versus credit cards.

Misconception: Debit cards are better for building your credit history than credit cards

Much beginner in the card world prefer to use debit cards rather than credit cards for the majority of their transactions.

While this can stem from a fear of the unknown, it can also simply be a recognition of the dangers of credit cards. When you open a new card and get a credit limit $20,000, it’s not just free money. You may not trust yourself with a large line of credit and prefer to rely on the immediacy of your debit card instead. After all, there is no “buy now, pay later” aspect of debit cards. That money will withdraw from your bank account (almost) instantly.


Unfortunately, there is an important misconception when it comes to debit card: These products do not have any impact on your credit score.

Hopefully, this is straightforward through semantics; why a debit your impact card Credit point? However, we hear many beginners ask this exact question, so it’s clearly still on everyone’s mind.

Related: Why Credit Cards Are Smarter Choices Than Debit Cards

Credit score factor

At the most basic level, your credit score is a numerical representation of how well you manage the lines of credit that have been extended to you. As we’ve mentioned in previous debunking myths, it consists of five elements:

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  • Payment history
  • Amount owed
  • Length of credit history
  • new credit
  • Types of Credit Used

Keep in mind that these factors are not equal, as some are rated higher than others:

Factors that make up your FICO score. FICO

As you can see, none of this applies to debit cards. There is no “payment history” on those accounts because every transaction comes from your bank account. You’ll never owe any money on a debit card, and since there isn’t any kind of line of credit extended for you, the last three factors don’t come into play either.

Related: How does credit score work?

Use a credit card to improve your credit score

Unfortunately, over-reliance on debit cards can come back to haunt you when you’re looking to finance a new car or buy your first home or even apply for a rental. household (where the landlord or rental company runs your credit). If your credit history is minimal or even nonexistent, you may have a hard time securing these types of loans. Even if you insure them, you may be charged a higher interest rate due to the fact that the lender is unsure of your creditworthiness.

All of these can be avoided by opening and using a credit card. We recommend starting with a annual free card such as Unlimited pursuit of freedom or Citi® Double Cash Card so you won’t have to “invest” anything right away. These cards also offer simple rewards for every purchase you make.


You’ll want to carefully set boundaries for your spending so you don’t have to pay a hefty bill. Also, be sure to pay off the balance in full every month. Even just a handful of transactions per statement period will demonstrate to the credit bureau that you’re managing your available credit responsibly, improving your credit score and making you a better person. should be more attractive to publishers.

Related: Ten Commandments for Credit Card Rewards

bottom line

Debit cards often seem to be a safer payment method than credit cards, since you don’t run the risk of overspending. The money goes out of your account immediately, preventing a larger bill at the end of the month that will accrue interest charges at very high rates.

However, using a debit card won’t affect your credit score, making it more difficult to borrow money in the future. Although you should always stay within the limits of what you can afford to actually buy And With monthly payments, credit cards should at least play a role in your financial strategy.

Additional reporting by Emily Thompson and Chris Dong.


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