EDITOR’S RATING
PROS
- No annual or monthly fees & No fees for account opening
- Up to 2% cash back
- First-year rewards doubled
- Relatively low minimum deposit
CONS
- High regular APR
The Verdict: The Discover it® Secured is the it family’s credit-(re)building specialist, and it’s superb at the task.
That’s because it’s one of only 11 “bad credit” credit cards with no annual, monthly or processing fees and one of only nine that offer rewards. You’ll earn 2% cash back on the first $1,000 that you spend at restaurants and gas stations each quarter as well as 1% on everything else. Better still, Discover will double whatever rewards you rack up during the first year your account is open.
So if you have limited or bad credit; you want to earn rewards but not pay for the benefit; and you don’t need any emergency spending power beyond your cash on hand, there’s a good chance that Discover it Secured is exactly what you’re looking for. You can find out for sure and learn more about the offer below.
The Highlights
- No Major Fees: You won’t have to worry about any annual, monthly, “processing,” or foreign-transaction fees, so score one for your wallet. But bear in mind that you’ll still get charged a late fee (waived the first time you miss your due date) and a 5% (min $10) cash-advance fee.
- Generous Rewards: The number of secured credit cards that offer rewards can usually be counted on a pair of hands, and the Discover it Secured card is one of those generous digits. Not only will you earn 2% cash back on your first $1,000 in restaurant and gas-station purchases each quarter, but you’ll also earn the overall market average of 1% back everywhere else. Plus, you don’t need to earn a minimum amount to redeem your rewards.
So let’s imagine that you place a $200 deposit and make $200 in purchases each month, including $100 at restaurants and gas stations. That’s $1,200 in restaurant and gas spending per year (well below the $1,000 quarterly quota), which would yield $24 cash back, and another $1,200 in additional spending that would generate another $12 cash back. That’s a total of $36 that you wouldn’t otherwise have.
You also have to consider the fact that whatever you earn during the first year automatically gets doubled. That means your $36 in annual earnings would actually be $72 the first time around. Needless to say, that’s one of the card’s coolest features. Just keep in mind that if your goal is to build or rebuild credit, maintaining low credit utilization — rather than earning rewards —should be your top priority.
The Lowlights
- High Regular APR: The average secured credit card has a 17.19% interest rate, according to WalletHub’s latest Credit Card Landscape Report. The Discover it Secured card charges 22.99% (V). You don’t want to carry a balance from month to month with this card — or any secured card, for that matter.
Other Things To Consider
- Lower Intro Rate For Balance Transfers: If you transfer a balance from an existing credit card within 45 days of account opening, you’ll have six months to repay what you owe at a reduced rate of 10.99%. But secured credit cards are self-funded, so why would any reasonable person shell out even a cent of interest to pay down a debt when they already have the necessary cash? Plus, there’s a 3% intro (5% after) balance transfer fee to further curb your enthusiasm about potential savings.
- Relatively Low $200 Minimum Deposit: Many people are hesitant to open secured credit cards and thus begin the credit-rebuilding process, given the need to place a refundable security deposit. That’s certainly understandable when the minimum deposit is $300 to $600, as is the case with many available offers, but the it Card’s $200 deposit isn’t nearly as big of a burden to overcome. If your finances allow, however, you can gradually add to your security deposit, up to a maximum of $2,500, and boost your total available credit, expediting credit improvement.
And if you pay your bill on time every month for at least a year and close your account with no remaining balance, you will likely have reached a higher credit tier at no cost. That means you could qualify for an unsecured card that offers possibly lower rates and doesn’t require forking over your own money.
- No Over-Limit Fee Or Penalty APR: If you opt in for the ability to spend in excess of your credit limit and Discover allows such a purchase to go through, you won’t be assessed a fee for the indiscretion. Normally, there is a fee commensurate with the amount by which you overspend. Furthermore, if you miss a due date or spend more than your limit, you will not be susceptible to the Penalty APR that most cards would assess at those times.
However, these features should be moot points as far as your goal is concerned. In other words, you don’t want to spend beyond your limit or miss a payment, as either would be detrimental to your credit-building efforts.
- Freeze It Feature & Free Overnight Replacement: Discover saves you a phone call if you believe your card to be lost or stolen by enabling you to suspend spending privileges with a tap of your mobile phone. That’s not the only courtesy you’ll get in such a situation, either. You’ll also enjoy a free overnight replacement if you don’t anticipate finding your missing plastic.
Most credit-card issuers will send you a free replacement if your card is ever lost or stolen. But you may have to wait up to 10 business days to receive it or pay a fee as high as $25 for expedited shipping. This aspect of the Discover it Secured card is therefore quite nice.
- Monthly Reviews For Unsecured Upgrade After Eight Months: This feature speaks to a practice that most credit-card issuers engage in without defining as an account perk. Generally, issuers will begin to consider accountholders for credit-limit increases after six months or so (in the case of unsecured cards) or upgrades to an unsecured offer after about a year of responsible secured-card use.
- Discover Limited Acceptance: Not only is Discover at a considerable disadvantage internationally relative to Visa and Mastercard (each is accepted in more than 200 countries, compared to 185 or so for Discover), but Discover also lags slightly behind domestically. Its cards are accepted at roughly 9.3 million merchants nationwide, which is considerably higher than Amex’s 6.9 million, but not quite up to par with Visa and Mastercard’s 9.5 million each.
Compared To The Competition
Secured credit-card offers tend to be rather straightforward, but that doesn’t mean it’s easy to choose one. In order to aid you in this endeavor, we compared the Discover it Secured card to four of its best competitors across six fundamental categories that figure to be important to all secured-card users
Discover it® Secured | Wells Fargo Secured Credit Card | Capital One® Secured Mastercard® | Harley-Davidson® Secured Credit Card | |
|---|---|---|---|---|
| Annual Fee | $0 | $25 | $0 | $0 |
| Rewards Bonus | N/A | N/A | N/A | N/A |
| Rewards Rate | 1 - 2% Cash Back | N/A | N/A | 1 point / $1 |
| Purchase Intro APR | N/A | N/A | N/A | N/A |
| Transfer Intro APR | 10.99% for 6 months Transfer Fee: 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)* | N/A | N/A | N/A |
| Regular APR | 22.99% (V) | 20.49% (V) | 26.99% (V) | 22.99% (V) |
| Editors' Rating | 5.0 / 5 | 3.3 / 5 | 5.0 / 5 | 5.0 / 5 |
| Details, Rates & Fees | Learn More | Learn More Rates & Fees | Learn More | Learn More Rates & Fees |
| Winners | ||||
