With a charge card, cardholders are unable to carry a balance from month-to-month and are required to pay their balances off in full after an interval of time, usually every 30 days.
With Extra, cardholders make a purchase and Extra pays off the merchant at the time of transaction. However, Extra connects to your checking account, so one day after you make a purchase, Extra takes the money from your bank account for that transaction.
At the end of the month, Extra then reports your card transactions to the credit bureaus Equifax and Experian. Extra does not currently report to Transunion.
Extra is in communication with Transunion about its information being added to Transunion’s credit reporting, says Sloane Wimberly, the Director of Communications at Extra Card.
By reporting cardholder’s payments to Equifax and Experian, the Extra Card can have a positive impact on your credit score as reported by those two bureaus.
Using an Extra Card can impact your credit utilization ratio, too. The credit utilization ratio is the ratio of credit you’re using to the total amount of credit you’ve been extended. Your credit utilization ratio impacts the ‘amount owed’ category of your FICO score. The ‘amount owed’ category comprises 30% of your credit score. Experts recommend keeping your credit utilization ratio under 30%, or even 10% if you can.
Since the card is paid off daily, your credit utilization ratio will reset each day, says Wimberly. When your credit utilization ratio is reset frequently, you’re more likely to have a low utilization ratio. Having a low utilization ratio also has a positive impact on your credit score.
The Extra Card charges no APR or interest because you have to pay off your balance daily. And unlike a credit card, Extra won’t let you spend more than you have in your bank account, so you won’t have to worry about overspending and potentially going into debt.