Discover it Secured Card
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If you have a bank account but limited or poor credit history, the Discover it Secured Credit Card 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.
This is the only unsecured credit card on the market that offers cash-back rewards — and generous ones at that. Not only does this card earn 2% back on dining and gas 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 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 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 Credit Card 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.
Fees and APR
- This card charges no annual fee.
- If you transfer a balance from another card, you’ll pay a 3% fee, 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 24.24%.
- The annual percentage rate for purchases is a variable 24.24%. This is in line — or better than– other secured credit cards.
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.
How this card compares
The Capital One Secured MasterCard charges no annual fee, and if you qualify, you can put down as little as $49 to get a credit limit of $200. Or, if you have to put down $200 to get a limit of $200, this card lets you pay that amount in installments.
The two reasons you may want to apply for the OpenSky Secured Visa Credit Card is if you don’t own a checking account, but still want access to a credit card, or if you’re looking for a secured card with a decent annual percentage rate.
There’s a very narrow band of consumers this applies to, we imagine.
If you are among the unbanked, an OpenSky secured credit card may be a good choice to help you build credit as there’s no credit check and no bank account required.