Credit cards and checking accounts often go hand in hand. They’re common financial products and the money from a checking account is often used to pay the balance on a credit card. While the two products are complimentary, one is not required to have the other. Customers who do not have a checking account can apply for a credit card, and have other options to access payment networks like MasterCard or Visa.
A credit card and checking account are reported to different institutions. When you have a credit card the account is reported to the credit reporting agencies Equifax, TransUnion and Experian, which list your payment history and other financial obligations. Checking accounts are not typically reported to credit bureaus, but mishandled checking accounts are reported to an agency called ChexSystems, which is a reporting system solely for bank accounts.
You can apply for a credit card if you do not have a bank account. According to the Equal Credit Opportunity Act, lenders are not permitted to stop someone from applying for credit because of their race, gender, ethnicity or financial situation. Because a checking account allows a bank to have a clearer picture of your financial habits, having one can increase the chances of your application being accepted if you do your banking with them. While bank accounts are reported to ChexSystems and not credit bureaus, it is possible that account problems are listed on the “Public Record” portion of your credit report.
A credit card allows you to use a payment network like Visa or MasterCard to make a purchase against a line of credit that can be paid at the end of the month or rolled over. Debit cards do not allow customers access to a line of credit, but they are branded by Visa or MasterCard and allow purchases to be made anywhere those brands are accepted. Debit cards are typically issued when opening a checking account, come with no annual fee and sometimes pay customers rewards for using them.
If you cannot get a checking account because of previous account problems prepaid debit cards are an option. A prepaid debit card can have money loaded onto it and is used to make everyday purchases, online transactions and bill payments. They are branded by Visa or MasterCard, and can be used anywhere they are accepted. Although they are used in conjunction with a payment network, a customer cannot “carry a balance” with a prepaid debit card. Purchases are debited directly from your account balance.