Discover it® Secured

Robin Saks Frankel  in  No Credit History Advertising Disclosure
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Recommended Credit Score

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A FICO score/credit score is used to represent the creditworthiness of a person and may be one indicator to the credit type you are eligible for. However, credit score alone does not guarantee or imply approval for any financial product.

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Best for first-year bonus

Annual Fee:
$0
Purchase Intro APR:
N/A
Balance Transfer Intro APR:
10.99% for 6 months
Regular APR:
25.24% Variable
Terms and Restrictions Apply | Rates and Fees
Bankrate Score: 95 out of 100

Commonly used for: Bad Credit, Cash Back, No Annual Fee, No Credit History, No Foreign Transaction Fees.

If you have a bank account but limited or poor credit history, the Discover it® Secured offer is a terrific choice to help build your credit and earn cash-back rewards, too.

We also like that you can quickly graduate to an unsecured Discover card with just eight months of good payment behavior.

Review

This is the only secured credit card on the market that offers cash-back rewards — and generous ones at that. Not only does this card earn 2% back on gas stations and restaurants up to $1,000 in spending per quarter, and 1% on everything else, but Discover will match dollar-for-dollar all those rewards at the end of the first year.

Like other secured cards, the Discover it® Secured version requires you to put down a refundable security deposit. That deposit becomes your credit line. Minimum deposit is $200. The maximum credit limit is $2,500.

Also like other secured cards, the annual percentage rate on the Discover it® Secured Card is quite high. Make sure to pay your balance off entirely each month – or else you’ll be paying big finance charges and losing the value of the rewards you earn.

Unlike some secured cards, you won’t pay any annual fee. Watch out for fee-heavy secured credit cards.

Who should get this card

The Discover it Secured offer is ideal if you’re just starting to build a credit profile or if you’re trying to rebuild you’re credit. Discover reports your payments to all three major credit bureaus – Equifax, Experian and TransUnion. On-time payments will help to improve your credit score.

Advantages
  • This is one of the rare secured cards that offers rewards.
  • Discover will give a dollar-for-dollar match of all the cash back you've earned at the end of your first year.
  • You'll pay no annual fee.
  • Discover will begin reviewing your account after eight months to see if you qualify for an unsecured card.
Disadvantages
  • You must have a bank account to qualify.
  • Discover is not as widely accepted as some other issuer's cards.
  • This card has a high APR, but that’s typical of secured credit cards.

Fees and APR

  • This card charges no annual fee.
  • If you transfer a balance from another card, you’ll pay a 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*, but keep in mind that eats into your credit limit, which is determined by your deposit.
  • Balance transfer APR is 10.99% for six months from the date of the first transfer. After the intro APR expires, you’ll pay a variable 25.24%.
  • The annual percentage rate for purchases is a variable 25.24%. This is in line — or better than– other secured credit cards.
  • See Rates & Fees

Extras, perks and using rewards

After eight months Discover will automatically review your payment history and let you know if you qualify to graduate to an unsecured credit card, which means you don’t need a security deposit as collateral.

Discover also supplies a free FICO credit score on your monthly statements. This can help you track your progress toward improving your credit.

You can redeem your cash-back rewards in any denomination at any time.