A secured credit card is a great way to build your credit from nothing or to rebuild it after it’s tanked. Let’s face it – we’ve all had moments of less-than-perfect credit! And if you might be one of these shopping around for the right card, the Discover secured credit card might be one to consider. Now called the “Discover it”® card has some features like cash back rewards and FICO credit score monitoring.

Let’s take a look at the good, the bad, and the ugly of the Discover it® card.

The Basics of the Discover it® Secured Credit Card

  • Interest Rate – The annual percentage rate (APR) disclosed is 23.99%, which the company says varies with the market.
  • Late fee – $0 for the first late payment. Up to $37 after that.
  • Security deposit – Minimum $200 deposit up to $2,500.
  • Processing fee – $0.
  • Annual fee – $0.

Discover Secured Credit Card Review

All secured credit cards have some qualities that are the same across the board. For example, they each require you to pay a security deposit for collateral should you later default on payments. In the case of the Discover it® card, the minimum deposit is $200, which will also give you a $200 credit limit. The maximum deposit and credit limit is $2,500.

Another factor they all have in common is that after a period of time of on-time payments, you will get your deposit back.

But this card has some features that stand out a little from the competition.

No Annual Fee

Discover does not charge an annual fee for its secured card, making it one of the few in this category. Because there is no annual fee, the amount of your deposit equals the amount of your credit line.

With cards that charge an annual fee, they usually take the fee out of your deposit up front, leaving you with only a portion of the deposit as your credit limit.

Discover also does not charge a set-up or processing fee for its secured card.

Security Features

Discover offers its cardholders a type of credit monitoring service that alerts you any time your social security number is used anywhere online. They also offer a free FICO score monitoring service that not only helps you keep track of where your credit is headed, but also keeps you aware of any discrepancies.

Cash Back Rewards

This is probably the most unique feature of the Discover it® card.

Discover is one of the few companies that treats its secured card members the same as its unsecured cardholders in respect to its rewards program.

Discover it® cardholders receive 2% cash back on restaurant or gas station purchases up to $1,000 per quarter, and 1% cash back on all other purchases on the card. They also host various promotions throughout the year, such as the Amazon and Target 5% cash back rewards offered almost every year around the holidays.

To make this deal even sweeter, Discover also matches the cash back you earn at the end of your first year! And your rewards never expire. Discover says you can cash those in at any time in any amount.

Drawbacks of the Discover it® Card

As with any of them, there are always some drawbacks or barriers that might make it easier to go with another card.

  • This card must be funded with a bank account.
  • Not a huge deal unless you happen to be someone who doesn’t have a checking account for various reasons.
  • The interest rate is not the lowest on the market.
  • Like we mentioned before, it’s not an unheard of interest rate for a secured card, but there actually are some that are lower. For example, the First Progress secured MasterCard and the Primor® secured VISA offer a 9.99% interest rate.
  • The maximum credit line you can secure with the Discover it® card is $2,500.
  • Chances are, this is all the credit you need, but there are cards like the two mentioned before that give you the chance to deposit and secure $5,000 worth of credit.
  • Discover is not as widely accepted as MasterCard and VISA.
  • This may make it a little more difficult to use everywhere.
  • The minimum deposit is $200.
  • While this is lower than a lot of secured credit card companies, it can still be a factor for someone struggling to make ends meet. There are not a ton of options with lower minimums, but there are a few you can look at.

Is the Discover it® Card Right for You?

You certainly have a lot of secured cards to choose from when you decide to take this route to rebuilding your credit. In fact, Nerd Wallet has a pretty great comparison and quiz to help find the best one for you. But basically when choosing a card, you need to do your research and thoroughly read each company’s rates and disclosures. Then ask yourself the following questions:

  • How much of a deposit can I afford to shell out?
  • Are there any hidden fees with these cards I need to know about?
  • Which card has the best interest rate and lowest fees?
  • Am I at a point financially where I can consistently make on-time credit card payments?

Conclusion

A secured credit card is something we recommend looking into as a means to rebuilding less than perfect credit or building it from scratch. But never apply for one without getting all the facts and determining what you can afford. If you decide to apply for the Discover it® secured credit card, come back and let us know how it works out for you!

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