Financial Planning for Generation X & Y Women
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Expert Q&A Archive

Does my debit/check card develop my credit record?

Regarding credit cards, I currently do not have a credit card. I do have a debit/credit/atm card from my check account and it is MasterCard affiliated. Will I be able to establish a credit record by using this? Is there a time when i should get a credit card or is it unnecessary?? It worries me that i won't have credit when the time comes to take out a loan because i haven't been using a credit card at all, but my debit card instead.
Bret Duvall:
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Your debit/check card will not establish any credit history for you. It is solely a convenience tool to access your checking account. My recommendation to establish credit early on is to shop around at some of the larger credit card companies (MBNA, Bank of America, CitiBank...), because they offer many student account packages. Start small and spend just a little a month on the cards, and it will start building your credit for future loans. Your target # of total credit cards should be no greater than 3. Hope this helps!
Gerri Detweiler:
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Debit cards generally are not reported to credit reporting agencies. While it's great that you have avoided credit card debt in college, you'll definitely want to get a credit card to build your credit history. A good credit history will help you when you go to rent a house or apartment, get a job, buy a car, etc.

Now is the perfect time to do so, before you graduate. Credit cards are easy to get for college students, but once you graduate you may find it more difficult to qualify. Shop around for a card with a low or no annual fee, and a low interest rate. You don't have to carry a balance to build good credit. You can simply use it for things you would buy anyway, and pay the bill in full each month.

Good luck!
Alyssa Rakovich:
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I am so pleased to hear you have not used a credit card - using a debit master card is the best way to go - The way credit is established is not by taking out lines of credit in your name - actually the more lines of credit you have open - even if you are not using them they count against you when you go to buy a car or home - The best thing is to wait til you have earned income - once you are working and have consistant inflow of income and you can proove income - that is what banks look for when they make loans - Do you have the consistant income to pay for the loan - not have you taken out credit cards and paid them off - because the credit cards that you open will count as open lines of credit that will count against you when you go for a loan.

I had no credit cards all through college - when I wanted to buy my first car I opened an account at First Federal - and went to them for my car loan - I never had a card in my name - It helped me that I had no other debt or outstanding credit lines - They looked at my income - consistent income -to debt ratio - I hope this helps-

Remember, It's not how much credit you have it's all about your income -

You know how easy it is to get a credit card - They set up booths everywhere when you are at college - If you feel the need to have one go ahead - use it exactly like a debit card - payy it off evry month - otherwise you will find yourself paying 30% more for everything you buy - that's usually the cost of the convenience and immediate gratification -

I have one credit card for emergency only - I use my master card debit card for everything - Credit cards should be unnecessary - however many peolle live outside their means - A good credit score is determined by debt to income ratio.
Anne Delle Donne:
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I would recommend that you begin to establish credit with your banking institution. It is important to begin this process for yourself in the event you will need to obtain a loan such as a mortgage. As the bank has your financial history with them they are usually willing to extend credit for you, even if it is the first time. Do not be worried about not having credit, I would just recommend that you establish this with your bank and start using it here and there to begin the process.
Connie K. Marmet:
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You indicate that you have a debit/credit/atm card. I suggest you check with your bank to see if the credit portion is currently enabled. You may already have credit in which case you are establishing a credit record--and a good on--since you are not carrying any debt. By having a line of credit you start your record. So if you have the discipline to have a credit card and either not use it or use it and always pay it off, you're on your way. Using a credit card to live beyond your ability to pay it off is a real concern and as we read in the paper a growing issue. Examine your income and expenses and your self-control before obtaining credit. Good luck!
Elizabeth Goldsmith:
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Hi Rosalie, Your current card will help you establish a credit record. Successfully managing a checking account is one of the first steps in establishing credit. It shows you pay your bills on time and avoid overdrafts and additional fees. A pattern of using money well, paying rent and utilities on time for example are used in credit scores, not merely the use of credit cards per se.
Delores Lenzy - Jones, CPA, CIA:
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Often times debit cards function dually as a credit and debit cards. So, that should establish some credit history for you. However, if you want a pure credit history, you can always open a credit card and charge occasionally, and paid it off before interest accrues.
Suzanne Kincaid:
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Good for you for being astute to building a good credit history and responsibly paying your debts all along so as not to get into financial trouble.

Since you are ready to graduate soon, I think it is a good idea to establish some credit history with charges and monthly payments. You will need to go to your bank and ask for a credit limit on your card which they will probably give you if they haven't already.

They may ask you to put some money into a savings account that cannot be withdrawn until you pay off your credit card.

I recommend that you then charge a relatively small sum say about $300 and then pay it off over about 6 months time to establish a pattern of paying timely and paying off completely a credit balance.

This will cost you some money in interest charges but is worth it to establish credit worthiness for when you will need a loan for a car or house payment.

After that, you are smart to always pay off the debit (or credit) card in full each month.

Best Wishes for a prosperous and enjoyable career!
Barbara Babcock:
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First of all, I want to congratulate you for getting all the way to your senior year of college without accumulating thousands of dollars in credit card debt. Your debit card is not considered a credit card (even with the Master Card logo), so it canít help you start up a credit history. Here are some ideas that may help:

∑ Have some source of regular income before you apply for any kind of credit, and open both a checking and savings account. Lenders consider all of these as essential steps for successful money management. Make regular deposits (no matter how small) into your savings account. This shows a lender that you manage your income and expenses well.

∑ Have a cell phone? Do you help pay utility bills or rent on an apartment? Do you rent a PO Box by the year? If so, you can document your own non-traditional credit history by keeping a record of your on-time payments for these regular expenses. Simply create a table showing the kind of expense, amount due, due date, and date paid. Attach a copy of your cancelled check or a copy of your bank statement showing that the bill was paid on time. If youíve been managing these expenses for at least 12 months and have never made a late payment, you have already taken a big step towards showing your creditworthiness.

∑ Are you a member of a credit union? If not, is there one you can join? Credit unions exist to support their members, and can be a good source for first-time credit, especially if you have a savings account with them.
Lexi Terrero:
I am not a credit expert, but I believe a debit card falls in line with your credit history, but a credit card (non-debit) is also important to use to build credit history. Creditors want to know that you have control in making a purchase via credit and then the ability to make monthly payments on time (usually 2 weeks before the due date). Also, you always want to pay more than the minumum payment required. Remember, start off slow with one credit card or two.

I would like to recommend that you visit Suze Orman's ( website, television show and books. Her advice is practical and she is trully someone that I have learned a great deal from. Also, if you are really interested in building wealth, you should pick up the following books:

* Nice Girls Dont' Get Rich by Lois P. Frankel
* Rich Dad Poor Dad by Robert T. Kiyosaki
* Young, Fabulous & Broke by Suze Orman

The above mentioned books have made an impact on how I make decsions to create and build wealth.
Carrie Bailey Morey:
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In my opinion, you do not need a credit card until you are out of college and on your own. However, you might be a lot more responsible than I was as a college senior! If you think you can handle the HUGE responsibility that comes with having a credit card and only use it in case of an emergency--and/or pay it off completely ever month when your bill comes in--then, sure get a credit card. I have to tell you though whenever you decide to make that step, you most likely won't have a problem getting a credit card, as they are a dime a dozen! My advice would be to continue to use your debit card and make sure you are paying any other bills on time--all the time! With all that being said I do think it is very important for all independent women to have a credit card in case of an emergency--that is a cushion in case you need it, but not to be used unless!

When you are ready for one, you will know, but I wouldn't use a credit card as a form of a loan--most of the time interest rates are too high to be taking loans (more than 30 days) out on them. Please feel free to write back if you have further questions or need clarification!
Nancy J. Nauser:
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First I recommend you take advantage of the annual free credit report. The review of your credit report will help you decide if you have established enough credit or if you may want to include a revolving trade line to your report. If you need information to access your free report please let me know. You may also want to access your credit score however it costs $6.95 per credit report.

I usually recommend college seniors get one credit card before graduating. I also caution that the credit limit is not additional income. When you use the credit card you are taking out a loan and must repay it with interest. Please plan how and when you will pay your credit card purchases before you charge. Track your purchases so you always know how much you owe and pay off the loan as soon as possible. Use the credit card to help establish your payment history so that interest on future purchases such as automobiles and houses is extended at the best possible rates. Paying bills on time every month will help establish you as credit worthy to future creditors.

I hope this information is helpful. Good luck with your future endeavors. If you want additional information please contact me.

An additional note

Information on credit reports is available in Step 4-2 of the Wi$eUp Curriculum. Free credit reports are now available to all consumers in the United States and its territories. The official website for these reports is