If Your Debit Card Is Declined Can it Hurt Your Credit Record?

by Madison Garcia
Many banks offer debit card overdraft protection for an extra fee.

As a general rule of thumb, a debit card decline won't impact your credit report. However, if you wait too long to get your account current, it could negatively impact your credit score and your ability to open new bank accounts.

Credit Record

For the most part, the credit bureaus ignore your debit card activity. Credit bureaus are more interested in what you do with a line of credit, and a debit card doesn't fall into that category. Your bank may set your debit card to automatically decline if you've overdrawn on your bank account. While it can be an embarrassing incident that results in overdraft fees, it won't show up on your credit report. However, collections accounts do affect your score. If your bank account remains overdrawn and you refuse to pay the bill, the bank could send your account to collections and report the incident to credit bureaus.

Other Consequences

Although poor use of debit cards may never affect your credit score, it could come back to bite you when you try to open a new bank account. Banks report bad banking activity like overdrafts and bounced checks to a bank reporting company called ChexSystems. When you apply for a new bank account, the financial institution will reference ChexSystems to see if you have a record of bad behavior. If it finds a record, your application may be denied.

About the Author

Based in San Diego, Calif., Madison Garcia is a writer specializing in business topics. Garcia received her Master of Science in accountancy from San Diego State University.

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