Does a Debit Card Actually Build Credit? What You Need to Know

When you’re trying to establish or improve your credit, reaching for a debit card might not seem like the logical choice. After all, debit card transactions typically aren’t reported to credit bureaus, and conventional wisdom suggests that building credit requires credit products like loans or traditional credit cards. But a new wave of financial technology companies is challenging that assumption. Products like Extra, Sesame Cash, and Fizz now offer debit cards specifically designed to build credit, claiming they can help you establish a positive payment history without the risks associated with traditional credit products.

This shift comes at a critical time. Credit card debt in the United States has remained substantial, with ongoing concerns about rising interest rates. The average APR on credit cards has exceeded 20% in recent years, making it increasingly difficult for consumers—especially younger ones—to manage existing debt while building new credit. With student loan payments resuming and credit card obligations mounting, many Americans face a challenging financial landscape. Certified financial planner Cary Carbonaro notes: “Young people today are facing interest rates unlike anything they’ve experienced before. When you combine that with both credit card and student loan debt, it becomes a very difficult situation.”

Why Establishing Credit Matters

Before evaluating whether a debit card can build credit, it’s important to understand why credit matters at all. Your credit profile determines what you can accomplish in adulthood—from securing housing to financing education or vehicles. Without demonstrating your creditworthiness to lenders, you’ll face barriers to nearly every major financial decision. This makes finding reliable ways to establish credit history essential for financial independence.

How These Products Claim to Work: A Closer Look at Three Options

Extra: Simple Spending Limits and Automated Payments

Extra operates by connecting to your existing bank account after downloading their app. The platform assesses your spending limit (ranging from $100 to $1,500) based on your bank balance and history—no credit check required. New users start with lower limits and can increase them by completing transactions successfully.

The mechanics are straightforward: when you make a purchase, Extra pays it immediately, then automatically retrieves the funds from your checking account the following day. This eliminates any possibility of carrying a balance or going into debt. The company reports your transaction activity to Equifax and Experian every month.

The catch involves membership costs. The credit-building plan runs $149 annually or $20 monthly, with no rewards included. If you want both credit-building features and rewards, you’ll pay $25 monthly or $199 yearly. Additionally, you cannot withdraw cash using the card, and rewards can only be spent within Extra’s own marketplace.

Sesame Cash: Complex Setup with Multi-Bureau Reporting

Sesame Cash, created by Credit Sesame (a credit monitoring platform), launched as a credit-building checking account featuring a prepaid Mastercard. The setup process involves multiple steps: download the app, create an account, potentially open a credit monitoring service, sign up for Sesame Cash specifically, and then deposit funds to serve as collateral for a secured line of credit with Community Federal Savings Bank.

You select your own credit utilization rate, and Credit Sesame uses your prepaid card purchases to create a matching balance on your secured line of credit, then pays it automatically. Critically, this activity reports to all three major credit bureaus each month.

The fee structure requires either $500 in monthly direct deposits or $1,000 in monthly spending to waive the $9.99 monthly fee. There’s also a $3 inactivity charge if you don’t move money or make a purchase within 30 days. However, Sesame Cash does allow paycheck advances of up to two days early and offers cash back rewards from qualifying retailers.

Fizz: Fee-Free but Limited to iOS Users

Fizz offers the simplest onboarding experience and charges no fees. However, it’s currently available only for iOS users, as the Android app hasn’t launched yet. After downloading and submitting your information, Fizz connects to your checking account, calculates your daily spending limit, and issues a Mastercard through Patriot Bank, N.A.

The process works like this: Fizz initially covers your purchases, which are then paid from your checking account either through automatic payment or manual payment. If you attempt to overspend, maintain insufficient funds, or miss a daily payment, Fizz freezes your card. Your activity reports to all three credit bureaus monthly, and the platform offers varying cash back rates and rewards on qualifying purchases.

The Evidence: Can These Debit Cards Actually Build Credit?

Research suggests these products do deliver measurable results. A study involving approximately 2,100 Extra cardholders found that users increased their credit scores by an average of 48 points over one year, with their approval likelihood for auto loans and credit cards doubling. Credit Sesame reported that early Sesame Cash users boosted their scores by an average of 35 points, with 90% of customers who had thin credit files establishing an average score of 607 within their first 30 days.

Fizz’s co-founder Carlo Kobe emphasizes the product’s advantages for students: “While we understand that financially literate consumers might prefer traditional credit cards, Fizz allows students to build credit without fees or interest charges. Beyond that, we provide hundreds of financial literacy resources, educational quizzes, and complimentary credit monitoring, helping users develop financial independence.”

Is Building Credit This Way Actually Worth It?

Despite these results, financial experts raise important questions about the practical value. Carbonaro argues that even for those genuinely needing to build credit, these debit cards often don’t justify their costs when better alternatives exist. “You can obtain a credit card for free in most cases,” Carbonaro explains. “For young people, those with marginal credit, or anyone with poor credit—these individuals typically cannot afford membership fees.”

She notes that Extra’s high fees represent a trade-off for avoiding interest charges while still building credit. However, this logic doesn’t overcome the fundamental issue: other established products achieve similar goals more affordably.

What About Alternatives?

For college students specifically, traditional student credit cards often represent a better starting point. These unsecured cards typically come with lower limits that students can increase through responsible usage. While they carry more overspending risk than debit alternatives, they’re free to obtain and often include rewards.

Secured credit cards offer another route, particularly for those with no credit or poor credit histories. These require a cash deposit, placing your own money at risk if you fail to pay—an incentive structure that makes lenders willing to approve applicants with limited credit history.

If credit products feel too risky, you can build credit through other methods: making timely payments on auto or student loans, using rent-reporting services, or maintaining utility payment records. These approaches require discipline but carry zero financial cost.

The Bottom Line

While debit cards designed to build credit do appear to work—the data shows real score improvements—whether they’re the right choice depends on your specific circumstances and what you can afford. For those with access to traditional credit cards or secured cards, those typically offer better value. However, for people genuinely unable to qualify for other products or those seeking a fee-based guarantee against going into debt, these debit cards present a viable (if expensive) option for establishing your credit profile.