The Discover it® Secured credit card requires cardholders to put down a refundable deposit in exchange for the chance to build credit from scratch or rebuild less-than-stellar credit. With an introductory cash back match bonus at the end of the first year and the opportunity to transition to an unsecured credit card, this card delivers perks for those who need a financial stepping stone to better credit. Secured credit cards typically only offer bare bones, but the Discover it® Secured is a different breed you may want to consider in your financial journey.
What we like about the Discover it® Secured card
- Rewards good behavior: Automatic reviews starting at 8 months to see if they can transition you to an unsecured line of credit and return your deposit.
- No annual fee: Many rewards cards saddle cardholders with an annual fee. The Discover it® Secured has no annual fee, so you don’t have to worry about adding to your debt.
- Earn rewards: Cardholders can earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases every quarter and 1% cash back on everything else.
- Intro bonus offer: Discover automatically match all the cash back you’ve earned at the end of your first year.
Things to consider
- Limited usage: Discover isn’t as widely accepted compared to cards within the Visa and Mastercard network. For some cardholders, this means a backup card or cash might be required at some establishments.
- High interest rate: If you tend to carry a balance month to month, you may want to consider a different card.
- Deposit required: In order to get approved for this card, cardholders must put up money for collateral, which acts as the credit limit. You’ll need a minimum of $200 to open an account.
Discover it® Secured Card credit-building details
The best feature of the Discover it® Secured is arguably the automatic reviews starting at 8 months. If you practice good financial habits like on-time payments, you can graduate to an unsecured card. There is no application required to get an unsecured card because the account review automatically occurs every eight months to monitor your creditworthiness. If you’re deemed eligible, you can receive your deposit back and move to an unsecured credit card.
In addition, the Discover it® Secured reports to all three major credit reporting agencies, so your good financial habits will be reflected at all three bureaus.
Discover it® Secured Card fees
The Discover it® Secured is luckily free of many types of fees. There are no foreign transaction fees to catch you off guard overseas, no over-limit fees, no late fee on your first late payment and no annual fee to offset your rewards.
After you use up your one get-out-jail free card for a missed payment, a late fee will set you back up to $39, but it won’t trigger a penalty APR.
The low fee structure of Discover it® Secured means users with poor credit won’t be met with surprise costs tacked onto their statement each month. If you can anticipate what your balance will be at the end of the month, you’re better prepared to pay it in full each month. On the other hand, pesky fees can eat into your low credit limit if you don’t pay close attention.
How does it compare to other secured cards?
For secured cards, you’ll be hardpressed to find a better option than the Discover it® Secured. But Capital One does offer the with a lower minimum deposit of $49, $99 or $200, based on your creditworthiness. The small deposit requirement unlocks access to a $200 credit line. Plus, after five on-time initial payments, you can access a higher credit limit.
If you have average credit and you don’t want to put down a security deposit, you might be interested in the . Boasting similar perks to the Capital One® Secured Mastercard®, this version delivers the same opportunity to access a higher credit line after five on-time payments and an identical APR — but no required deposit.
Check out the comparison table below to get a better idea of which card might be best for you:
|Card||Ongoing Purchase APR||Annual Fee||Intro Bonus||Credit Needed||Key features|
|Discover it® Secured||24.49% Variable||$0||Dollar for dollar cashback match by Discover after the end of the first year||New/Rebuilding||2% cash back at gas stations and restaurants on up to $1,000 in combined purchases every quarter, automatically. Plus, earn unlimited 1% cash back on all other purchases; Cash back match at the end of first year; Ability to graduate to an unsecured card after eight-month account review|
|Capital One® Secured Mastercard®||See Terms||$0||None||Limited, Bad||Only $49 required for initial $200 credit line (based on creditworthiness); After five initial on-time payments, cardholders get access to higher credit limit; No annual fee to add onto overall debt load|
|Capital One® Platinum Credit Card||See Terms||$0||None||Average, Fair, Limited||No deposit required; Make your five initial payments on time and get access to higher credit line; Monitor your credit improvement with unlimited access to your credit score through CreditWise®|
The bottom line
The Discover it® Secured offers a refreshing change for credit card users who are trying to build credit but also value rewards. Structured for those who’d like to earn as they rebuild, this card is a smart way to build credit from scratch or recover from poor credit. To make the most out of this card, make sure to practice good financial habits to eventually trade in for an unsecured credit card.
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