Is the Step Card a Debit or Credit Card?
Understand the Step card's unique classification: a hybrid solution designed to manage money and build financial independence.
Step is a financial platform offering a Visa card designed primarily for younger individuals to manage their money. It presents a hybrid functionality, combining aspects of both a debit card and a credit card. This approach aims to simplify financial management and enable users to establish a positive financial standing.
Understanding Step’s Card
The Step card operates as a secured spending card, meaning users can only spend the funds available in their linked Step account. This prevents overspending and overdraft fees. Transactions made with the Step card draw directly from the user’s balance, much like a standard debit card.
Despite functioning like a debit card in terms of spending limits, the Step card processes transactions in a manner similar to a credit card. It is a Visa-branded card, usable anywhere Visa is accepted. Unlike a traditional credit card, there is no revolving line of credit or interest charged on purchases, as all spending is backed by the user’s own deposits.
How Step Builds Credit
The Step card helps users, particularly those new to personal finance, build a credit history. It achieves this by reporting payment activity to the three major credit bureaus: Experian, Equifax, and TransUnion. This reporting helps establish a positive payment history, a significant factor in credit scoring.
While not a traditional credit card, the Step card functions similarly to a secured credit card for credit-building purposes. Each transaction made with the card, backed by funds in the user’s account, contributes to their credit profile. For users under 18, Step can track and report up to two years of payment history once they reach adulthood and verify their account. This allows individuals to begin building credit without the risks of traditional credit products, such as debt or interest.
Opening a Step Account
Acquiring a Step card and account involves a straightforward process, designed for accessibility across various age groups. There is no minimum age requirement to open an account; however, individuals under 18 must have their account sponsored by a parent, guardian, or trusted adult. This sponsorship allows for oversight and management, providing a structured environment for financial learning.
The application process requires basic personal details such as a full name, date of birth, and address. For users 18 or older, a Social Security Number (SSN) is necessary for identity verification. No credit check is performed during the application, making it accessible even to those with no prior credit history. After application, a virtual card is available for immediate use, and the physical card arrives by mail within two to three weeks.