If you want to control your spending but still have easy access to your money, a debit card is a great tool. Because debit cards are either linked to your bank account or prepaid, you can’t run up a balance the way you can with a credit card—and you don’t have to carry around cash. But what does it take to qualify for a debit card? If you don’t have a credit history, can you still get one?
You don’t need credit to get a debit
Debit cards are completely unrelated to your credit; they don’t require a credit history. In order to get one, you only need a bank account, from which the card will withdraw funds, or you can make a deposit at an authorized retailer. Many banks, drug stores and gas stations offer prepaid cards.
Although your debit card probably has the name of a credit card issuer on it, it’s not a credit card. This is good news if you’ve had difficulty getting approved for credit in the past, but it comes with disadvantages, too. Your debit card use doesn’t appear on your credit report, so even if you spend responsibly, it won’t improve your standing with the credit bureaus.
You should still get credit
Finding a no-credit credit card can be challenging, but it’s a worthwhile pursuit. Using a credit card on a regular basis and paying it off each month will help you get approved for, and get better rates on, mortgages and other loans in the future. Good credit can also help you pay less for insurance, cell phones and other goods and services.
Being able to build good credit is a big advantage of credit cards, but it’s not the only one. Credit cards typically have better payment and fraud protection than debit cards, and a crook who steals your credit information can’t drain your bank account. Credit cards may also offer perks like rental car insurance if you use the card to make your reservation.
What to do if you have no credit
There are some easy ways to go about getting a credit card for people with no credit. First, apply for credit at a bank or credit union where you already have an account; they’re more likely to issue a first time credit card. You can also sign up for a secured credit card. Unlike debit cards, most secured credit cards are reflected on your credit history, and using one responsibly can help you qualify for an unsecured card in the future.
Credit cards for people with no credit may be hard to find, but they’re out there. And because the length of your credit history is an important element of your credit score, consider making a credit card application a priority in the new year.