How to graduate from debit-only to being a credit card holder

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question Dear Sally,
I have a personal checking account at a bank. I use their debit card, and that works for most online services. But it does not work with my Netflix account. I am thinking of getting a credit card from them, just for a Netflix subscription.

This obviously would work, but I wanted to know if there is anything I should look out for. I have never had a credit card and always use debit cards for online shopping and stuff. I don't understand how credit cards work and don't want to do anything that would cause closure of my account. Your advice is highly appreciated. – Kate


Dear Kate,
After checking Netflix, I see that it does take debit cards, but only those affiliated with MasterCard or Visa. Perhaps your debit card isn’t affiliated with a major card network? If that’s the case, if you can handle a debit card responsibly without getting into trouble with the bank, you can handle a credit card, too. The principles are similar.

With a debit card, you have a bank account with a balance of cash available. You make a purchase. The bank pays the merchant and deducts the amount from your bank account.

With an unsecured credit card, you have a credit account with a set spending limit. You make a purchase. The bank pays the merchant and sends you a statement at the end of the month. You pay the bank.

Either way, you have to keep track of how much cash (for the debit card) or available credit (for the credit card) you can spend. If you overspend, you can be in trouble.

Before you even think of applying for a credit card, though, you need to find out if you can qualify for one first since you don’t appear to have a history of using credit. If you’ve handled other types of loans, such as a car loan or student loan, you should have a credit record, but you need to find out where you stand.

First, go to to pull one of your credit reports from one of the three credit bureaus (Equifax, Experian or TransUnion) for free. Go over it carefully to make sure all the information is correct. Then check your VantageScore at either or your FICO credit score through Discover’s Credit Scorecard. There are slight differences between the credit scores, but the FICO score is the one most often used by lenders. Both credit scores range from a low of 300 up to 850. The higher the score, the better you look to lenders. If your scores are really low, say 600 or below, you’ll have a hard time qualifying for a regular unsecured card.

If you’re unable to pull a credit report or score because you don't have one, the odds are you’re going to have to start from scratch. Most likely this will be with a secured card, which works a bit differently from an unsecured card. A secured card requires a deposit of several hundred dollars, which serves as your credit line. After about a year of charging and repaying in a timely manner, you can check your credit reports and scores again to see if you can qualify for an unsecured card. Once you cancel the card, you get your deposit back minus any outstanding fees.

I understand why you are wary of getting a credit card. We all hear stories about people who get deep into debt with them. They spend more than they can afford, and when the statement comes, they only pay part of the bill, or just the minimum amount due. They pay high interest charges, and the balance grows. Sometimes they spend up to the credit limit on one card, so they get another. Next thing you know, they owe so much money that they don’t know how they will ever pay it back. If they can’t keep up the minimum payments, their credit scores plummet. Some will even file for bankruptcy to get out of credit card debt.

As scary as such a scenario is, you don’t have to let it happen to you. Just follow one rule: Don’t spend money before you have it. For example, if you’re shopping in the mall and want to buy something, there’s nothing wrong with using your credit card, provided you have enough money in your bank account to pay for it when the bill comes. Using a credit card instead of your debit card may even be a better idea as credit cards come with additional consumer protection, such as zero liability for fraudulent charges.

On the other hand, if you’re shopping at the mall and want to buy something, but you don’t have enough money until next month or later, stop! Don’t use your credit card to spend next month’s money today. By the time next month’s paycheck gets here, you'll have other bills, too, and your check may not go as far as you planned. Besides, what if you lose your job, or have your hours cut? Wait until you actually have the money in the bank, and then make your purchase.

When you get your credit card statement, make it a rule to pay the entire balance before the due date. You’ll never get in credit card trouble if you limit your purchases and are careful not to carry a balance from month to month.

Before you get a credit card from your bank, consider shopping around for a card that best meets your needs. You should generally look for a card with no annual fee, unless the card perks significantly outweigh the fee. You may decide your bank has the best deal, or you may find a different card with rewards, cash back, or other perks that appeal to you. Credit cards are a useful payment tool. Find a card you like and take good care of your credit card account, and you’ll be fine.

See related: 10 places NOT to use your debit card, Many prefer debit for everyday buys, credit for the big ones, 7 exceptions for 'zero liability' policies

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Updated: 03-19-2019