Am I still building a credit score if I use my credit card like a debit card?
"I strongly suggest you look at CreditKarma and see how each aspect of what you are doing impacts your score. Here's my take - There's an anti-credit approach that many have which, to me, is over the top. ""Zero cards, zero credit"" feels to me like one step shy of ""off the grid."" It's so far to the right that it actually is more of an effort than just playing the game a bit. You are depositing to the card frequently to do what you are doing. That takes time and effort. Why not just pay the bill in full each month, and just track purchases so you move the cash to the account in advance, whether that's physical or on paper?  In your case, it's the same as charging one item every few months to keep the card active. If that's what you'd like to do, that's fine. I'd just avoid having the card take up too much of your time and thought.  (Disclaimer - I've used and written about Credit Karma. I have no business relationship with them, my articles are to help readers, and not paid placement.) mhoran's response is in line with my thinking. His advice to use the card to build your score is what the zero-credit folk criticize as ""a great debt score."" Nonsense. If you use debt wisely, you'll never pay interest (except for a mortgage, perhaps) and you may gain rewards with no cost to you." Regardless of how it exactly impacts the credit score, the question is does it help improve your credit situation? If the score does go up, but it goes up slowly that was a lot of effort to retard credit score growth.  Learning to use a credit card wisely will help you become more financially mature. Start to use the card for a class of purchases: groceries, gas, restaurants. Pick one that won't overwhelm your finances if you lose track of the exact amount you have been charging. You can also use it to pay some utilities or other monthly expenses automatically. As you use the card more often, and you don't overuse it, the credit card company will generally raise your credit limit. This will then help you because that will drop your utilization ratio. Just repeat the process by adding another class of charges to you credit card usage. This expanded use of credit will in the long run help your score. The online systems allow you to see every day what your balance is, thus minimizing surprises. "I always hesitate to provide an answer to ""how does this affect my credit score?"" questions, because the credit agencies do not publish their formulas and the formulas do change over time. And many others have done more reverse engineering than I to figure out what factors do affect the scores. To some extent, there is no way to know other than to get your credit score and track it over time. (The credit report will tell you what the largest negative factors are.) However, let me make my prediction. You have credit, you aren't using a large percentage of it, and don't have defaults/late payments. So, yes, I think it would help your credit score and would build a history of credit. Since this is so unusual, this is just an educated guess." AIUI credit cards report three main things. The potential problem with your strategy is that by pre loading you never actually get a bill and so your provider may not report your payments. Better to wait until the bill comes and then pay it in full. That ensures that your use of the card is properly reported.
My son who is now 21 has never needed me to cosign on a loan for him and I did not need to establish any sort of credit rating for him to establish his own credit.  One thing I would suggest is ditch the bank and use a credit union. I have used one for many years and opened an account there for my son as soon as he got his first job. He was able to get a debit card to start which doesn't build credit score but establishes his account work the credit union. He was able to get his first credit card through the same credit union without falling work the bureaucratic BS that comes with dealing with a large bank. His interest rate may be a bit higher due to his lack of credit score initially but because we taught him about finance it isn't really relevant because he doesn't carry a balance. He has also been able to get a student loan without needing a cosigner so he can attend college.  The idea that one needs to have a credit score established before being an adult is a fallacy. Like my son, I started my credit on my own and have never needed a cosigner whether it was my first credit card at 17 (the credit union probably shouldn't have done that since i wasn't old enough to be legally bound), my first car at 18 or my first home at 22. For both my son and I, knowing how to use credit responsibly was far more valuable than having a credit score early. Before your children are 18 opening credit accounts with them as the primary account holder can be problematic because they aren't old enough to be legally liable for the debt. Using them as a cosigner is even more problematic for the same reason. Each financial institution will have their own rules and I certainly don't know them all.  For what you are proposing I would suggest a small line of credit with a credit union. Being small and locally controlled you will probably find that you have the best luck there. I just opened and received my first credit card - Discover IT - I'm a student. How do I do my best with this card? I plan to only use it for gas and groceries and to pay it off every month by the due date. Is this all I need to know to be successful?  Also I got a report with it that said my current credit score is 665. I don't know how I have a credit score, all I've ever paid with is cash and my debit card. Can anyone enlighten me? Thanks! "You ask about the difference between credit and debit, but that may be because you're missing something important. Regardless of credit/debit, there is value in carrying two different cards associated with two different accounts. The reason is simply that because of loss, fraud, or your own mismanagement, or even the bank's technical error, any card can become unusable for some period of time. Exactly how long depends what happened, but just sending you a new card can easily take more than one business day, which might well be longer than you'd like to go without access to any funds. In that situation you would be glad of a credit card, and you would equally be glad of a second debit card on a separate account. So if your question is ""I have one bank account with one debit card, and the only options I'm willing to contemplate are (a) do nothing or (b) take a credit card as well"", then the answer is yes, take a credit card as well, regardless of the pros or cons of credit vs debit. Even if you only use the credit card in the event that you drop your debit card down a drain. So what you can now consider is the pros and cons of a credit card vs managing an additional bank account -- unless you seriously hate one or more of the cons of credit cards, the credit card is likely to win. My bank has given me a debit card on a cash savings account, which is a little scary, but would cover most emergencies if I didn't have a credit card too. Of course the interest rate is rubbish and I sometimes empty my savings account into a better investment, so I don't use it as backup, but I could. Your final question ""can a merchant know if I give him number of debit or credit card"" is already asked: Can merchants tell the difference between a credit card and embossed debit card? Yes they can, and yes there are a few things you can't (or might prefer not to) do with debit. The same could even be said of Visa vs. Mastercard, leading to the conclusion that if you have a Visa debit you should look for a Mastercard credit. But that seems to be less of an issue as time goes on and almost everywhere in Europe apparently takes both or neither. If you travel a lot outside the EU then you might want to be loaded down with every card under the sun, and three different kinds of cash, but you'd already know that without asking ;-)" "Bank of America has been selling off their local branches to smaller banks in recent years.  Here are a few news stories related to this: Along with the branch buildings, the local customers' savings and checking accounts are sold to the new bank.  It is interesting that you were told that your savings account is being sold, but that your checking account will remain with BofA.  I guess it depends on the terms of the particular sale. Here are your options, as I see it: Let the savings account move to the new bank, and see what the new terms are like.  You might actually like the new bank.  If you don't, you can shop around and close your account at the new bank after it has been created. Close your account now, before the move.  If you have a different bank you'd like to move to, there is no need to wait. Since your checking account is apparently staying with BofA, you could move all your money from your savings account to your checking account, closing your savings account.  Then after ""mid August"" when the local branch switches to the new bank and everyone else's savings account has moved, you can call up BofA and tell them you want to move some of the money from your checking account into a new savings account. If you really have your heart set on staying with BofA, option 3 looks like a good, easy choice. To address your other concerns: Bank of America is a big credit card company, so I doubt that your credit card is being sold off.  Your credit card account should stay as-is.  Even if your savings account and checking account are at a different bank, there is no need to switch credit cards. Your savings and checking accounts have nothing to do with your credit report or score, so there is no concern there.  If you end up wanting to switch to a new credit card with a different bank, there are minor hits to your credit score involved with applying for a new card and closing your current card, but if I were you I would not worry about your credit score in this.  Switch credit cards if you want a change, and keep your credit card if you don't." I plan to stay debt free, but I appreciate the non-debt-related advantages of having a good credit score. If you plan to stay debt-free, then opening up more cards will not significantly change your credit score.  You seem to want to be going from a good score to a great score, which adding cards alone will not do.   Also, I highly doubt it will significantly affect any of the five things you mention.  If you had a bad credit score, then I could see some effect on renting an apartment, getting a job (where trust with money is a component of the job), etc., but don't try to game the system for some number. You won't magically get cheaper cell phone rates, lower insurance premiums, etc. Typically, a direct debit is set up by the company who will be receiving the money, not by you or your bank. So you need to contact your credit card company, and ask them to set up the direct debit. I can't answer the question if you should or shouldn't get a credit card; after all, you seem to manage fine without one (which is good). I started using credit cards when I lived in the UK as the consumer protection you get from a credit card there tends to be better than from a debit card. I'd also treat it as a debit or charge card, ie pay it off in full every month. That way, because you're not carrying a balance the high interest rate doesn't matter and you avoid the trap of digging yourself deeper into the hole each month. Cashback or other perks offered by a credit card can be worth it, but (a) make sure that they're worth more than the yearly fee and (b) that they're perks you're actually using. For that reason, cashback tends to work best. I'd get a VISA or Mastercard, they seem to be the ones that pretty much everybody accepts. Amex can have better perks but tends to be more expensive and isn't accepted everywhere, especially not outside the US. But in the end, do you really need one if you're managing fine without one? Credit cards always charge for withdrawing cash, because if they didn't then you could have an indefinite loan and pay no interest simply by withdrawing enough cash each month to pay off the previous month's bill before the due date. It's nothing to do with using an ATM -- they'll charge you for getting a cash advance over the counter as well.