Discover it^® Secured Credit Card Review

The Discover it^® Secured Credit Card is best if you’re new to credit or trying to repair your credit score. Unlike most cards geared toward consumers with low credit scores, the Discover it^® Secured Credit Card earns cash back — and it doesn’t hit applicants with expensive fees or confusing terms. It’s consistently one of our top credit card choices for building credit.

The Discover it^® Secured Credit Card is a secured credit card, meaning it requires a security deposit (ranging from $200 to $2,500), which will act as your credit limit. In the event you don’t pay off what you charge to the card, Discover will use the deposit to recoup that loss. Otherwise, it works just like a regular, unsecured credit card.

• Rewards program

  It’s rare to find a secured credit card that offers rewards, so this is one of many reasons the Discover it^® Secured Credit Card stands out from the competition.

  Cardholders can earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically.

  Rewards programs can tempt you to overspend, so make sure you can keep your spending in check if you sign up for this card. The best way to build credit with a secured card is to use less than 30% of the card’s credit limit and pay it off on time and in full every month.

• Chance to graduate to an unsecured card

  After you’ve had the card for seven months, Discover will begin conducting monthly account reviews to see if you’re eligible to graduate to an unsecured card and get your deposit refunded.

  Discover will consider your behavior across your credit cards and loans from Discover as well as other issuers or lenders. You can also get your deposit back if you choose to close your account and pay any remaining balance.

• Reports to all three credit bureaus

  Account and payment history with the Discover it^® Secured Credit Card is reported to Equifax, Experian and TransUnion. So if you handle the card responsibly, that behavior will help build a good credit score.

• No annual fee

  While many cards for consumers with low credit scores come with expensive annual fees and monthly maintenance fees, the Discover it^® Secured Credit Card is an affordable option. It has an annual fee of $0, so you’re not paying anything on top of your security deposit.

• No penalty APR and no late fee on your first late payment

  Most credit cards will increase your interest rate if you pay late. That higher rate is called a penalty APR. The Discover it^® Secured Credit Card won’t do that. Also, the late fee is none the first time you pay late. After that, up to $41.

  Paying on time is the most important factor in your credit score, making up 35% of your total credit score, so you should try to make every payment on time. You can set up autopay through Discover or your bank to avoid missing your due date.

• Requires a security deposit

  You’ll need to deposit at least $200 to open the card and secure a $200 credit limit (or more, if you want a higher line of credit). You can get the money back if you pay off the card and close the account, or if Discover graduates you to an unsecured card. However, the deposit might be a con if you don’t want to tie up a minimum of $200.

  Note, many of the unsecured options for cardholders with low credit scores charge annual and ongoing maintenance fees that can be just as expensive as the deposit for this card. Not to mention, you’ll have to pay those fees every year as long as your account is open. With that in mind, a $200 upfront deposit may be the better way to go.

• Low credit limit

  The Discover it^® Secured Credit Card‘s maximum credit limit is $2,500. This is on the low side compared to some secured credit cards. For instance, the Capital One Quicksilver Secured Cash Rewards Credit Card offers a credit limit up to $3,000, and the U.S. Bank Altitude Go Visa Secured Card lets you secure up to $5,000.

  A lower credit limit may be fine if you’re just trying to establish a regular payment history. However, if you need to make larger purchases, it could be limiting.

• High APR

  The Discover it^® Secured Credit Card has a 27.74% Variable APR. Though this is on par with other cards aimed at applicants with limited, bad or poor credit, it’s still high. To avoid interest charges, make it a point to pay your balance in full each month.

The Discover it^® Secured Credit Card is an excellent tool to rebuild from bad credit, or to start building credit history if you have none. But if you don’t have $200 on hand for the security deposit, there are other cards worth considering: the Capital One Platinum Secured Credit Card, the Capital One Quicksilver Secured Cash Rewards Credit Card and the OpenSky^® Secured Visa^® Credit Card

Capital One Platinum Secured Credit Card

 
With the Capital One Platinum Secured Credit Card, Capital One determines your minimum deposit after you apply. It could be $49, $99 or $200, all of which come with a $200 starting credit limit. Because the card allows you to deposit less than your actual credit limit, this card could be the best option for those who aren’t able to put down the $200 the Discover it^® Secured Credit Card requires. Just know, you are guaranteed to be approved for the lower deposit amount.

The Capital One Platinum Secured Credit Card comes with a $0 annual fee (see rates & fees), but it doesn’t earn cash back rewards like the Discover it^® Secured Credit Card. Both cards have relatively high APRs — but the Discover it^® Secured Credit Card‘s is lower, which is something to keep in mind if you think you might carry a balance from month to month.

Capital One Quicksilver Secured Cash Rewards Credit Card

 
The Capital One Quicksilver Secured Cash Rewards Credit Card is similar to the Discover it^® Secured Credit Card because it can help build your credit while allowing you to earn rewards. You can earn 1.5% Cash Back on every purchase, every day; 5% Cash Back on hotels and rental cars booked through Capital One Travel (terms apply). It also has a slightly higher maximum credit limit of $3,000.

While both cards earn cash back, the Discover it^® Secured Credit Card earns a higher rate on gas and restaurant purchases — which could make it a better choice if those are your top spending categories. That said, when using a secured card, remember that making payments on time and building your credit is the main goal — not earning cash back.

OpenSky^® Secured Visa^® Credit Card

 
The OpenSky^® Secured Visa^® Credit Card is a unique secured credit card because it doesn’t require a credit check. So when you apply, your credit score won’t be taken into consideration or be impacted. However, it has an annual fee of $35 and requires a security deposit of at least $200.

This card may be a good fit for you if you have poor credit or don’t want your credit score to take another hit from applying for a credit card — or if you’ve been denied from other secured credit cards.

The Discover it^® Secured Credit Card is a good card that lets you earn cash back while building credit — and the automatic monthly reviews (after seven months) to see if you qualify to get your deposit refunded make this a more transparent product than many competing cards. Whether you’ve got limited / poor credit and want to repair it, or you’re new to credit and need a card that can help you establish a good payment history, the Discover it^® Secured Credit Card is a solid choice.

However, if you’re worried that your credit is too bad to qualify for even a secured card, you may want to consider the OpenSky^® Secured Visa^® Credit Card. It doesn’t require a credit check when you apply (though financial information such as income and housing payment is considered) and charges a reasonable $35 annual fee.