Can Debit Cards Establish Credit?

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A debit card is a basic financial instrument that is tied to a checking account or savings account at the bank. Discover how a debit card with a high account balance can prove proper money management with help from a registered financial consultant in this free video on money management and personal finance.

Part of the Video Series: Money Management
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Video Transcript

This is financial advisor, Patrick Munro talking about can debit cards establish credit. A debit card is a basic financial instrument that is tied to your checking account or savings account at the bank. When you pay for a a purchase you are essentially paying in a format that looks like a credit card; it has a Visa or a MasterCard logo on it, and but the money's coming out of your account in real time and there is no debt load that you will carry in the future. And a debit card can rebuild credit insomuch as you can keep your account balances high as possible so that when you are going to apply, ultimately, for a credit card, or a mortgage, or an auto loan people can see that you manage your cash accounts in an effective way. As I've said many times before, cash is king. No one carries cash for the most part in modern society, but they carry a key to their cash and what that is is a debit card. So, the appropriate management of your cash accounts using a debit card can be a way to rebuild credit. This is financial advisor, Patrick Munro talking about how a debit card can rebuild credit.

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