Since Netspend is a prepaid debit card program, it doesn't report your account activity to credit bureaus. Using one of these cards can be safer and more convenient than carrying cash, but it still allows a cardholder to make in-person and online purchases.
Debit Cards vs. Prepaid Cards
Cardholders may use their pre-funded Netspend Visa Prepaid Card or Netspend Prepaid Mastercard for purchases and payments as they would a debit card. The difference is that debit cards are often backed by a line of credit or overdraft protection, and those are considered forms of credit that can be reported to credit agencies.
Using Netspend cards won't do anything to build or hurt cardholders' credit because the company doesn't extend any credit to them. Cardholders are responsible for loading their own money into their accounts before they use their cards—otherwise, they'll be declined.
The company does offer a Netspend Premier card for those who want to enroll in their Direct Deposit program. That means users' payroll or government payments go directly into their NetSpend accounts each month.
The company offers a "purchase cushion" of up to $10 with its Netspend Premier card. However, it's still not considered a line of credit. The company is just allowing users' accounts to have a negative balance of up to $10 in the event they don't have enough to cover a purchase or payment. Any money they deposit afterward will go toward paying back that amount first.
NetSpend's Account Opening Requirements
Unlike credit and debit cards, Netspend does not require a Social Security Number to open an account.
The company only requires a name, address, and email address to enroll on its website. Then, you create a username, password, and security question. Once you complete these two steps, you receive a card in seven to 10 business days. You can begin to fund the account at any time.
Both credit cards and traditional debit card accounts require applicants to provide a Social Security Number and date of birth. Companies that offer these types of accounts run credit checks prior to approval, which often determines the amount of credit they can provide. They can report this information to credit bureaus whether they approve the account or not.
Credit reporting bureaus maintain credit reports specifically through Social Security Numbers. If NetSpend never requires cardholders to supply this information, it can't forward any information to the credit bureaus.
Since NetSpend accounts are prepaid by the cardholder's own funds, a reportable offense would be rare. The company could possibly contact a collections agency if you use the "purchase cushion" of up to $10 with its NetSpend Premier card and don't pay it back.