Improve your credit with a debit card


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For many, having a good credit rating is key to achieving many financial milestones in life, from getting a lower interest rate on a loan to getting a higher credit limit. on your credit card. Credit cards are a way for people to increase their credit score with their daily purchases.

However, getting a credit card often requires a good credit score, so it can be difficult to start building your credit. However, fintech companies have been working on innovative solutions to help you build your credit score outside of traditional methods.

Extra Card created a debit card that allows people to build credit without a credit check or high credit score to qualify. Below, Select takes a look at how Extra Card works and the various features it offers.

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How can Extra be a debit card that improves your credit score?

Extra was founded by Max Hellerstein, Cyrus Summerlin and Biren Shah in 2020. Extra works a bit like a payment card. With a charge card, cardholders are not able to carry over a balance from month to month and are required to pay their balance in full after a time interval, usually every 30 days.

With Extra, cardholders make a purchase and Extra reimburses the merchant at the time of the transaction. However, Extra connects to your checking account, so one day after you make a purchase, Extra takes the money from your bank account for that transaction.

At the end of the month, Extra then reports your card transactions to the Equifax and Experian credit bureaus. Extra does not currently fall under Transunion.

Extra is in communication with Transunion about its information being added to Transunion credit reports, said Sloane Wimberly, director of communications at Extra Card.

By reporting cardholder payments to Equifax and Experian, the additional card can positively impact your credit score as reported by these two bureaus.

Using an additional card may also impact your credit utilization rate. The credit utilization rate is the ratio between the credit you use and the total amount of credit granted to you. Your credit utilization ratio impacts the “amount owed” category of your FICO score. The “amount owing” category includes 30% of your credit score. Experts recommend keeping your credit utilization rate below 30%, or even 10% if you can.

Because the card is redeemed daily, your credit utilization rate will reset each day, Wimberly explains. When your credit utilization ratio resets frequently, you are more likely to have a low utilization ratio. Having a low usage rate also has a positive impact on your credit score.

The Extra card does not charge any APR or interest as you have to pay your balance daily. And unlike a credit card, Extra won’t let you spend more than you have in your bank account, so you won’t have to worry about overspending and potential debt.

To qualify for an Extra Card, you don’t need a credit score either. Extra does not perform credit checks, but potential cardholders must meet the following requirements:

  • Applicants must be 18 years or older
  • You must have an SSN or ITIN number
  • Applicants must have an address in the United States where you can receive your supplemental card (PO boxes are not valid)
  • Have a checking account at one of the 10,000 selected US banks
  • Have an iOS device (iPhone or iPad) or Android device running version 10 or later

According to Wimberly, 99% of applicants are approved for the card because all transactions on the card are guaranteed in cash. When cardholders sign up for Extra, they receive a spending limit based on the real-time balance of the bank account they choose to connect, Wimberly explains.

Fees and Rewards

Additional charges either annual or monthly fees for cardholders. For Extra Credit Building, you’ll pay $8 a month, but if you’re willing to pay for the whole year upfront, you’ll get a slight discount and pay $84. For Extra Credit Building and Rewards, you’ll pay $12 per month or $108 for the whole year.

For the highest price, you will have access to the Extra Rewards program. Cardholders will earn 5 reward points for every dollar spent. Five reward points are worth up to 1 cent, so the redemption value is only 0.2 cents per point. Essentially, you get 1% back on all purchases if you redeem your points for maximum value.

Extra has a rewards store available through the Extra app, but store offerings vary. According to Wimberly, recently popular items in the store include an electric toothbrush, card games, gift cards and AirPods. Given that Extra is a credit-focused debit card, it’s no surprise that it offers few rewards and little flexibility in how cardholders can redeem their points.

The Extra Card cannot be used abroad, so there are no foreign transaction fees.

Alternatives to the Extra Card

The extra fees can be quite a steep price to pay in trying to boost your credit score. You might consider alternatives like a secured credit card, which requires you to pay a deposit that serves as security if you do not pay your bills. Generally, your line of credit is equal to the amount of your deposit. Secured cards are much easier to approve if you have bad credit or no credit.

When Select analyzed various secure cards to determine which cards were best for people with no or bad credit who wanted to improve their scores, it ranked the Discover it® Secure Credit Card as the winner.

With the Discover it® Secured Credit Card, cardholders only need to put down a minimum deposit of $200 for a line of credit equal to that amount. Seven months after account opening, Discover will assess your credit card account to determine if you can upgrade to an unsecured line of credit.

If you don’t want to make a down payment, you might consider the “no annual fee” Visa® Petal® 1 credit card, which is aimed at people with non-prime credit who are looking to improve their scores.

The Petal 1 card has no annual fee, no welcome bonus, and earns 2-10% cash back at select merchants. With the Petal 1 card, you’ll have to make your monthly payments in full or risk having to pay interest. Unlike the Extra card, the Petal 1 card falls under the three credit bureaus, has no annual fees or foreign transaction fees (unlike Extra, the Petal 1 can be used abroad).

Plus, unlike the Extra Card, the Petal 1 Card is a credit card, so you’ll have a whole month to pay your bill.

At the end of the line

the Extra Card can be a useful tool for people who don’t qualify for most credit cards, but are looking to improve their credit scores. However, the card has a monthly fee of $8 or an annual fee of $84, so you might be better off getting a secured credit card with no annual fee in order to build your credit.

Secured cards will require a security deposit, but you’ll usually receive the deposit and qualify for an unsecured card after you’ve made your payments on time and in full for a few months. Extra Card also has drawbacks: your card history is not shared with the three credit bureaus and cannot be used abroad.

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Visa Petal 1 credit card is issued by WebBank, Member FDIC.

For Discover it® secure credit card rates and fees, click here.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.


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