Does Withdrawing Cash From a Debit Card Affect Your Credit Score?

Quick Answer

Most debit cards aren’t reported to the credit bureaus, and use money from your account (as opposed to using credit), so withdrawing cash using them won’t help or hurt your credit score.

A woman using a debit card online.

Using your debit card to withdraw cash generally doesn't affect your credit scores. In fact, most debit cards don't help or hurt your credit at all—even if you choose the "credit" option when paying.

Why Debit Cards Generally Don't Affect Your Credit Score

Debit cards are not usually considered a form of credit: You use money you have in your account to withdraw cash or make purchases with a debit card. As such, most debit cards don't get reported to the credit bureaus, meaning the account won't appear on the credit reports used to calculate your credit scores.

There are a few exceptions, however. The Experian Smart Money™ Digital Checking Account and Debit Card is one option you can use to build credit without building debt. Experian Smart Money™ links to Experian Boost®ø, a feature that adds eligible bill payments to your Experian credit report. These include certain utilities, phone, insurance, rent and streaming service payments. As a result, paying these bills from your Experian Smart Money Digital Checking Account could improve credit scores based on your Experian credit report after three months of payments.

Other services exist as well. Several companies, such as Extra and Fizz, offer debit cards or debit-credit hybrid cards that could potentially help improve your credit scores. These programs work differently from traditional debit cards, however, and some don't let you use your card to withdraw cash.

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Is It Better to Withdraw Cash From a Debit Card or Credit Card?

You may be able to withdraw cash from an ATM or bank teller using your credit card with a cash advance. There are several drawbacks to these:

  • Credit card issuers often charge a 3% to 5% cash advance fee
  • The cash advance may start accruing interest immediately
  • Many credit cards have a higher annual percentage rate (APR) for cash advances
  • Your card's cash advance limit may be lower than its credit limit

Cash advances also increase the card's balance, and a higher reported balance can increase your credit utilization ratio, which might hurt your credit scores.

In short, credit card cash advances can be helpful when you don't have enough money to cover an emergency expense, or if you need cash quickly and don't have another way to access the money in your accounts.

However, because of the fees and interest involved, it's generally best to use a debit card to get cash from an ATM or bank, or use it to make a purchase.

How to Build Credit

There are many ways to establish and build your credit, including options that don't require taking on new debt.

Open a Credit Card

Many credit card issuers report your account and payments to all three credit bureaus (Experian, TransUnion and Equifax). You won't pay any interest if you pay your balance in full each month, and many cards don't have annual fees.

You could consider different types of credit cards depending on your credit score:

  • Unsecured credit cards: Regular or standard credit cards are generally unsecured, meaning you qualify based on your creditworthiness. These can include many types of rewards, travel and balance transfer cards.
  • Store cards: Store cards are unsecured cards that are often part of a brand's or retailer's rewards program. These might be easier to qualify for than more general rewards cards.
  • Secured credit cards: Secured credit cards require you to provide a refundable security deposit, which often determines the card's credit limit. It can be easier to qualify for a secured card than an unsecured card because there's less risk to the card issuer. Some of the best secured cards offer rewards and don't charge an annual fee.
  • Cards that don't require a credit history: Some credit card issuers will ask to link to your bank accounts and consider your banking history rather than (or in addition to) your credit history. These can be a good option if you don't have credit or if you're working on your credit.

No matter the type of credit card, making your payments on time and maintaining a low utilization ratio are important if you want to use a credit card to improve your credit.

Become an Authorized User

Another option is to become an authorized user on someone else's credit card. You won't be responsible for the card's payments and don't have to use the credit card, but the card issuer may report the account to the credit bureaus under your name. This can help your credit scores as long as the primary cardholder has a good payment history and low utilization ratio.

Get a Credit-Builder Loan

A mix of revolving and installment credit accounts in your credit file, such as credit cards and loans, can help your credit scores. On-time loan payments can also help you build a positive payment history. If you're not already paying off a loan, you might want to consider a credit-builder loan or fee-free lending circle. These are often easy to qualify for and relatively inexpensive.

Track Your Credit-Building Progress

Keep an eye on your credit with Experian's free credit monitoring, which includes FICO® Score tracking and real-time alerts when there are changes to your credit file. If you're looking for a credit card, Experian can also show credit card offers based on your credit profile.