Discover Secured Card Review
If you're new to credit or need to rebuild your credit score, the Discover it Secured credit card offers an excellent way to do it. With a generous rewards program and no annual fee, the Discover it card is a rare secured card that more than holds its own against other secured cards as well as plenty of unsecured credit cards.
Discover it Secured Card Overview
The Discover it Secured credit card is a favorite among consumers for several reasons. Far from punishing those with bad credit with high fees or unreasonable terms, it's designed to help people rebuild poor credit so they can reestablish themselves in the credit world.
Unlike other credit builder cards, the Discover it Secured card has no annual fee, no monthly maintenance fee, and no nasty surprise or hidden fees. Even better, its terms and policies are clearly spelled out up front.
For example, Discover lets cardholders know exactly when they're eligible to get their security deposit refunded, as well as how soon they're eligible to upgrade to an unsecured card.
Once a cardholder has owned their card for eight months, Discover automatically reviews their account to see if the cardholder qualifies for a higher credit limit or an unsecured card.
Another popular perk is the card's rewards program, which is something of a rarity among credit builder cards. Discover offers cash back on certain purchases, as well as matching on all cash back rewards earned over the course of the first 12 months.
Pros and Cons of the Discover Secured Credit Card
The Discover it Secured credit card has a number of benefits, along with a few drawbacks. Here's what you need to know before you apply.
No annual fee - Unlike a lot of cards marketed toward those with bad credit, the Discover it card doesn't charge an annual fee.
No maintenance fee - The Discover it Secured credit card doesn't come with a monthly service or maintenance fee.
Rewards program - Making it a standout among credit builder credit cards, the Discover it Secured card offers an attractive rewards program. Cardholders get cash back on eligible purchases, along with doubled rewards from Discover after the first 12 months.
Reports to all three major credit bureaus - Discover reports your account history to all three major credit bureaus, so you can use your card to improve your credit score.
Free to use abroad - Discover doesn't charge foreign transactions fees, so you can use your card anywhere in the world without incurring additional charges.
Upgrade to an unsecured card - Discover will automatically review your account to determine if you qualify for an upgraded account after you've had your card for eight months. If you're eligible, you'll get your security deposit returned and enjoy all the privileges and benefits of an unsecured card.
Waiver of first late fee - If an emergency comes up or your payment due date slips your mind, Discover will waive the late fee the first time you miss. Don't let this become a habit, though, because it's only a one-time waiver.
Low credit limit - Cardholders start out with a $200 credit limit, which is relatively low. Depending on your creditworthiness, however, you may be able to get a limit as high as $2,500.
Bank account required - You can't get a Discover it Secured credit card if you don't have a bank account. This is because your security deposit must be funded from your bank account.
More difficult to get approved - Unlike a lot of cards marketed toward people with bad credit, Discover doesn't approve just anyone. The company will pull your credit report when you apply, and many reviewers say they were declined despite having a credit score over 600.
Other Features to Know
It's rare enough to find a secured card card that offers a rewards program, and even more uncommon to snag a credit builder card that matches your rewards.
However, this is a perk you can look forward to if you qualify for the Discover it Secured credit card. After 12 months of owning the card, Discover will give you double cash back on any rewards you've accumulated throughout the year.
For example, if you earned $500 in cash back rewards within the past 12 months, Discover will automatically match it, giving you another $500 for $1,000 total. The double cash back match is unlimited, making it a potentially lucrative reward.
You also have a full 12 months to earn the double cash back reward, which is a more generous time period compared to other cards that offer signup bonuses to new cardholders. This means there's less pressure to meet spending thresholds, which can tempt people to overspend just as they're trying to repair their credit score.
It's important to note, however, that the matching reward only applies in the first year you own your card. However, you're eligible for the 1% and 2% cash back rewards program over the life of your account.
In addition to the rewards program, Discover offers cardholders and non-cardholders alike the ability to check their credit score once a month for free. Through its Discover Scorecard feature, Discover lets anyone signup for free and view their FICO® score.
This is a great perk when you're trying to rebuild your credit score. Checking your score won't negatively affect your credit, and you can even sign up for free alerts that let you know whenever your credit profile shows unusual activity.
How to Earn and Redeem Points, Rewards & a Sign-Up Bonus
Discover's rewards program is straightforward and easy to understand. Here's what it entails:
2% cash back on purchases at restaurants and gas stations up to $1,000 every quarter
Unlimited 1% cash back on all other purchases you make with your card
Discover will automatically match all cash back rewards you earn after your first 12 months of owning the card
There is no expiration date for rewards, so you don't have to feel rushed to redeem them. You can also redeem as much or as little as you like, whenever you like.
Cardholders can redeem their rewards in a variety of forms, including cash. Discover gives you the option to get a cash reward as a credit toward your statement or a direct deposit to your bank account.
You also have the option to use your cash rewards to make Amazon purchases. To do this, you must connect your Amazon account to your Discover account.
There are no travel reward opportunities, but you can put your rewards toward gift cards or even charitable donations.
Discover Credit Card Terms & Fees
The Discover it Secured credit card's terms and fees are clearly spelled out on the Discover website, so there's no guesswork when it comes to deciding if this is the right card for you.
Type of Fee
Foreign transaction fee
APR for balance transfers
Intro rate of 10.99% for the first 6 month, then 22.99%
APR for cash advances
Balance transfer fee
Intro rate of 3% of the amount transferred for the first 6 months, then 5% of the amount transferred
Late payment fee
First late payment fee waived, then up to $40 for subsequent late payments
Returned payment fee
Up to $40
Keep in mind that you'll need to make a security deposit of at least $200 to open your account. If you want a higher credit limit, you can deposit up to $2,500.
Who Is This Credit Card Best For?
The Discover it Secured credit card is ideal for people who want to rebuild a low credit score. It's also a good option for people who are just starting out and need to build credit from scratch.
Many people don't like the idea of a secured credit card because they don't want to pay a security deposit. However, the Discover it Secured card's rewards program's cash back matching feature can easily replace the $200 you're required to come up with in the beginning.
Considering the card is aimed toward people with lower credit scores, you don't need a top notch credit score to get approved. This makes the Discover it Secured card a great option for those who want to rebuild their credit without paying astronomical fees.
Can the Discover Secured Card Help Rebuild or Reestablish Credit?
One of the main benefits of the Discover it Secured card is that it reports to all three major credit bureaus: Experian, Equifax, and TransUnion. This means you can use it to establish credit or rehabilitate a poor credit score.
While the Discover it Secured card's rewards program is a nice benefit, it's best to avoid spending just to score cash back — especially if it puts you in danger of carrying a balance.
By carrying a balance from month to month, you'll not only end up paying interest, but you can hurt your credit utilization. Accounting for 30 percent of your credit score, your credit utilization is the ratio of how much available credit you have compared to how much credit you're currently using.
Ideally, you should aim to keep your credit utilization rate below 30 percent. For example, if the total combined limit on your credit cards is $1,000, you should keep your balance below $300.
Even better, don't maintain a balance at all. Instead, charge small purchases to your Discover card and then pay them off in full every month.
If you keep up this habit over several months, you'll see your credit score improve. Discover might also offer you the option to upgrade your card to an unsecured credit card with a high credit limit — another way to improve your credit utilization rate and boost your credit score.
How to Apply for the Discover it Secured Card
You can apply for the Discover it Secured credit card in three easy steps. Keep in mind that Discover will pull your credit when you submit your application, which means racking up a hard inquiry on your credit report.
1. Go to the Discover it Secured card website and click "apply now" - Visit the Discover it Secured card website and look for the organe "apply now" button.
2. Fill out the application - After you select a card design, you'll need to provide some personal information, along with your bank account number and routing number. This is required so Discover can withdraw the $200 security deposit from your account.
3. Get approved and get your card - Once you're approved, you should receive your new card within 14 days. If your application is declined, Discover will let you know why.
Discover Secured Card Reviews
Considering its generous perks and lack of an annual fee, it's probably no surprise that the Discover it Secured card gets mostly glowing reviews.
For example, one reviewer from WalletHub said they were able to get credit limit increases with relative ease. However, they expressed some frustration over not getting upgraded to an unsecured credit card despite making on-time payments every month for two years.
Another reviewer said the Discover it Secured credit card helped them improve their credit score. After eight months of use, Discover upgraded their credit limit to $1,800, and the reviewer saw their score increase by 40 points.
Yet another positive reviewer called the card a "game changer" that helped them rebuild their credit score after financial mismanagement. The reviewer saw positive improvement after six months of owning the card.
However, some reviewers say it's difficult to get approved for the Discover it Secured card. For example, one reviewer said they were turned down despite having a high income and a 625 credit score.
Another reviewer said they encountered difficulty getting Discover to review their account and offer an upgrade to an unsecured card. While the reviewer says they paid off their bill consistently every month for several months, they explained they were disappointed that Discover didn't seem to follow through on the promise to review the cardholder's account.
Another reviewer said Discover declined their application despite the person having a 540 credit score and being approved for a different secured card.
Alternatives to the Discover Secured Card
Before you sign up with Discover, it's worth shopping around. Take a look at several other credit cards so you can know for sure you're getting the best deal for your finances.
The Capital One Secured Mastercard is another great option for those looking to rebuild credit or establish a credit profile. Unlike the majority of secured credit cards, Capital One offers a credit limit that may be higher than your security deposit.
Card applicants can choose to make a security deposit of $49, $99, or $200. In exchange, you get a $200 credit limit and no annual fee.
The Capital One Mastercard's interest rate is 26.99%, which is a bit higher than the rate for the Discover it Secured card. However, cardholders get to pick their own payment date, and Capital One will consider giving you a higher credit limit after just six months.
The Citi Secured Mastercard doesn't have a rewards program, but merchants around the country and the globe tend to accept Mastercard more readily than a Discover card. If you do a lot of traveling, it's worth considering whether a Discover card will make shopping tough.
The Citi Secured Mastercard also lets you pay a security deposit ranging between $200 and $2,500, so it's a good card if you want a higher credit limit. At 22.49%, the percentage rate is comparable to the Discover it Secured card.
The OpenSky Secured Visa is another secured credit card designed to help people with bad credit rebuild. One perk is that OpenSky doesn't pull your credit when you apply, so you don't have to worry about racking up a hard inquiry on your credit report.
You can also deposit anywhere between $200 and $3,000 as your security deposit, which is refundable when you close your account.
The OpenSky Secured Visa has a $35 annual fee, but the 17.39% interest rate is one of the lowest you'll find anywhere.
Discover it Secured Card FAQs
Here are some of the most commonly asked questions and answers for the Discover it Secured credit card.
Is the Discover it Secured Credit Card Good?
The Discover it Secured credit card is one of the best deals you'll find among credit cards marketed toward people with bad credit or no credit. If you want to boost your credit score after a rough financial patch, the Discover it Secured card is a good card to have in your wallet.
It's quite rare to find a secured credit card that offers rewards, let alone matching cash back rewards. The Discover it Secured card also offers an introductory interest rate for balance transfers, charging 10.99% APR for the first six months.
To make the Discover it card work for you, it's best to avoid making purchases unless you can afford to pay them off each month. By paying your bill in full, you avoid paying interest and get the benefit of a lower credit utilization rate.
What Credit Score Do You Need for a Discover it Card?
Discover doesn't state a specific cut off for the credit score required to get approved for a Discover it secured credit card.
Instead, Discover states that it reviews the information each applicant provides, including their past credit history, income, bankruptcy information, and any other information Discover finds relevant.
Online reviews can give a little insight into what kind of score you should have before you apply. For example, some reviewers said they were declined even with a score in the 600 range, while others with a score between 550 and 580 said they were approved for a card.
However, it's important to note that Discover, like other credit card lenders, most likely takes other factors into account when making a decision about a particular applicant. Someone with a higher credit score might have a lower income or a past bankruptcy that raises red flags.
If you get declined for a Discover it Secured card or any other credit card, it's worth checking your credit score and credit report. There are five factors that make up your credit score, and any one of them can potentially sink a credit application.
You can get your credit report for free. Once you have it, take a look at the five factors that make up your credit score:
Percentage of Credit Score
When you review your credit report, look at how you fare when it comes to each factor. Do you have a lot of new credit because you've opened a bunch of credit cards lately or just took on a new auto loan?
Or maybe you have a poor mix of credit, or your credit utilization rate could use some work. If you struggle in one or more areas, work on improving them so you can boost your score and reapply for credit down the road.
How Long Does It Take for the Discover Secured Card to Become Unsecured?
Discover says it conducts automatic account reviews once a cardholder has had their card for eight months. If you use your card responsibly, Discover says it will refund your security deposit and possibly offer you an upgrade to an unsecured credit card.
Can I Add More Money to My Secured Discover Card?
According to Discover, you can request a higher credit limit by adding more funds to your initial security deposit. If you do this, however, you can't use the extra money to pay your balance.
To take advantage of this option, your account must have been open for at least 31 days. You can reach Discover by calling 1-800-347-3085.
If you want to repair your credit score or establish credit from scratch, a secured credit card that reports to all three credit bureaus can be a useful tool. The Discover it Secured credit card offers an attractive rewards program, no annual fee, and a reasonable interest rate.
While the Discover it card requires a $200 security deposit, using your card responsibly can mean getting this money back in as little as eight months. Overall, the Discover it Secured credit card is a great stepping stone to an unsecured card and a better financial future.
About the Author
Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in CNBC, Investopedia, CreditCards.com, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.