Wondering if an extra debit card is worth the hassle? Use this guide to determine if having an extra debit card is worth it and the pros and cons of having one as well as if it can raise your credit score.
Extra Card has made a debit card that allows people to be able to build credit without needing a high credit score to qualify. This sounds like a great idea in theory, but is it worth it? Having a good credit score is often necessary to be able to make good financial decisions, so this card can be tempting for many to get.
The Extra Card might be worth it if you need to build your credit and you want to be able to get a card without a credit check. The annual fee is high, though, and it does not report to all three credit bureaus.
If you really need to raise your credit score and are looking into getting the Extra Card, make sure to read this full review before deciding what you should do. Anytime you take out a new debit or credit card, there are risks to link about.
How Does the Extra Debit Card Affect My Credit?
The main purpose of the Extra Debit Card is that it impacts your credit utilization ratio. This ratio describes the amount of credit you have used with the amount of credit you have available to you. It affects the amount owed part of your FICO score which is 30% of your overall credit score.
This card is paid off daily, so your credit utilization ratio will reset every day. This allows it to lower faster and be able to get you a higher credit score. Since you have to pay the balance daily, you are also not charged an APR, which allows you to keep interest at a minimum. You will not be able to spend more than is in your bank account, which means you will not be able to overspend and go into debt.
You also do not need a credit score to get this card which makes it easier for young people to get when they are trying to build credit for the first time. Extra also does not perform credit checks, so even if your score is very low, you will be able to get an Extra Card as long as you meet these requirements:
- You must be 18 years or older
- You must have an ITIN or SSN number
- You must have a physical address, not a PO box
- Have a checking account at a qualifying bank
- Have an IOS or Android device
About 99% of people are approved for the Extra card since the transactions on the card are backed by cash. So the company does not see it as a risk to give the card to those who might not have high credit scores or any credit scores.
You will be given a spending limit though, based on the bank account balance you have when you are given the card.
Fees And Rewards
As with any type of credit or debit card, you want to make sure you are aware of the fees and rewards before applying. You will be charged an $8 annual fee, or you can pay $84 upfront for a discount. If you are applying for the Extra Credit Building and Rewards, you will need to pay $12 a month or $108 for an entire year.
If you have the latter card that is a little more expensive, you receive more rewards. You will earn 5 points for every $1 you spend and 1% back on all your purchases. You can also qualify for more rewards through the Extra App.
Compared to credit cards, the rewards on the Extra Card are limited, but this is to be expected when it comes to a card that is only meant to help you build credit.
Alternatives To The Extra Card
If this card does not seem like the right fit for you, there are some choices available that you can think about if you are solely focused on building credit and nothing else. The monthly fee is quite a bit higher than many other cards, which is why some people are deterred from using it.
One of the other options you have is a secured credit card. These also help you build credit, but you will need to be able to put down some form of collateral in case you cannot pay your bills. Secured cards are often easier to get when you have no credit score or a very low credit score.
One of the main secured credit cards you might want to look into is the Discover it Secured Credit Card. You will need to put down a deposit for the credit line amount you want. The minimum is $200, but you can get more down if you have the funds.
After 7 months, Discover will evaluate your credit score and determine if you can move into an unsecured line of credit.
Another option is the Petal 1 No Annual Fee Credit Card. This is given to people with low credit scores who need help building credit.
Here is a little more information about both to see if they are better choices for you.
Petal 1 Card
The petal card has no annual or monthly fee which is one of the main reasons why people tend to go for this one. You can also have a fair or bad credit score. Unlike the Extra Card, it reports to all three credit bureaus.
It works more like a credit card, so you will need to pay it back at the end of the month. If you do not pay it back at the end of the month, you risk getting charged high interest and going into debt.
You will earn about 2% to 10% cash back on certain merchants, which is quite a bit higher than the Extra Card. There is no welcome bonus, unlike other credit cards.
Some other things to consider include:
- No deals on intro APR
- Regular APR is 20.74% and 30.24%
- No foreign transaction fee
- Fair or bad credit is acceptable
Discover It Secured Credit Card
If you want an easily secured credit card, go for this choice. Keep in mind, though, that your credit line is only large as the deposit you can put down. So, if you put down $300, you will have a credit line of $300.
A minimum of $200 is required, though. When you apply, you do not need a credit score which makes it very appealing to many people. The best part is that you can also be moved to an unsecured line of credit after 7 months if your credit score is increasing and Discover thinks you are on a good financial track.
Unlike the Extra Card, you have the entire month to pay back the balance. If you can't, you will start getting interested and possibly wrack up debt depending on how much you are paying off every month.
Pros And Cons Of The Extra Card
By now, you might have a good idea of if the Extra Card will work for you or not. It's a great card for building credit, and that's about it. You have to pay back the balance every day according to what's in your bank account, it's not a good card to have for emergencies or when you might have a bill you need to pay that requires a credit card.
The plus though is that you can get a card to help you build credit with no credit check. There is no welcome bonus and a high annual fee but this is to be expected when it comes to credit cards that are only meant to build credit.
- Does not require a security deposit
- Easy to apply for and get
- No credit check
- No minimum credit score required
- Cannot be used internationally
- Costs $84 annually
- Only reports to Equifax and Experian and not the other credit bureau
- No welcome bonus
- Low rewards
Extra Card is a fantastic option for those who need to lower their credit utilization ratio and, in turn, build their credit score. Since you do not need a credit score to apply, you can also get this card as your first way of building credit before needing to apply for a loan or credit score. The rewards and bonuses are low compared to real credit cards but not unusual.
If you have a deposit or some collateral you can use, you might want to go with a secured credit card instead. They allow more flexibility and many do not have annual fees. You can also use some internationally and possibly be able to move into unsecured lines if the company thinks you are building good credit.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.