Your debit card is like a portal to your bank account. With it, you get direct access to the exact amount of cash you have sitting in your checking account. Debit cards are straightforward, and you can't really spend money you don't have, even if you wanted to. Some debit cards charge overdraft fees, which is just a fancy way of saying that if you only have $20 in your bank account and you spend $50 on your debit card at the grocery store, the bank wants to get paid for saving you from embarrassment in the checkout line. With debit cards, you also don't pay a monthly bill or statement, because money comes out of your account each time you swipe.
The downside of debit? No long term benefits. Even if you're great at budgeting, pay all of your bills on time, and never go into overdraft, your bank won't reward you, and neither will credit bureaus. Debit card transactions aren't reported to the credit bureaus—It's like making good grades all semester and not getting a transcript, just because your professor decided not to upload your scores. Not only would you be peeved, but when applying for internships and jobs you wouldn't have a transcript to submit. You don't want to be in that position when it comes time for adulting (leasing a car, renting an apartment, or even getting a mortgage.)
What makes credit cards different
A credit card is a bit different. Traditionally, credit card allow you to spend more money than you have on purpose. The definition of credit is the ability to obtain good or services, before you've actually paid for them. When you purchase something on a credit card, you haven't actually paid for that item yet—the bank actually pays for the item for you, and you pay them back at the end of the month. Sounds simple, right? But if you don't actually have the money to pay your credit card bill at the end of the month, you'll get charged interest. Interest is the money that the bank charges you for using their money. Besides being able to defer payment until the end of the month or later, credit cards have the benefit of impacting your credit score if you consistently pay the bill on time (among other factors that may influence your credit score like age of credit and credit utilization).
A good credit score is like a reward for good money habits. To keep it really simple, when you pay your bills on time, your credit score is likely to go up. It's a measure of how good you are at paying back what you owe. In the future, if you want to borrow money to lease a car or buy a house, potential lenders will pull your credit report. Your credit report is basically a transcript that shows if you've paid bills on time in the past. With your credit report, potential lenders try to determine whether or not you're likely to be a good borrower. The better your score is, the lower the interest you'll pay on those loans. The bottom line? Getting a good credit score now is a shortcut to saving tons of money later on.
❌ Doesn't help you build credit
❌ No rewards for good money habits
✅ No unexpected debt
✅ Can't spend more than you have
❌ Need to visit a bank branch to get a card
❌ Bad customer service
✅ If you paid the full balance on time, congratulations! Your payments get reported to the credit bureaus and you may be rewarded for good behavior
❌ Huge hidden fees, terms you need a PhD to understand
✅ Potential for lower interest rates on loans later on
❌ Hard to get approved for as a student
❌ Bad customer service
How to build credit as a college student?
Fizz is the debit card for college students that build credit and unlocks special discounts around campus. With Fizz, you get smart money tips, because your personal finances shouldn't feel hopeless.
✅ No debt, rewards for good money habits, credit building, discounts and spend controls
✅ A debit card that helps you with your future, by building credit in a way that's transparent (no hidden fees or complex terms, tailored instant approval for students)
✅ Build credit without interest or fees
✅ Next level discounts around campus, so don't have to feel guilty about spending on the things you love
Sam is a Kenyon College alum and is head of content at Fizz. He's been a go to personal finance resource among his peers since getting his first credit card during his sophomore year of college. He hails from Washington, DC, loves all things aviation, and currently lives in Los Angeles.