The Ultimate Guide to Credit Cards
Tuesday, March 19, 2024

Discover it® Secured Credit Card Review

Eric Bank

By: Eric Bank

Eric Bank
Eric Bank

Eric Bank is an M.B.A. who has covered financial and business topics since 1985, appearing regularly on Credible, eHow, WiseBread, The Nest, Zacks, Chron, BadCredit.org and dozens of other outlets. Eric specializes in taking complex subject matters and explaining them in simple terms for consumer audiences, particularly in the world of personal finance. Eric holds a Master's in Business Administration from New York University and a Master's in Finance from DePaul University.

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Editor: Ashley Fricker

Ashley Fricker
Ashley Fricker

Ashley Fricker has more than a decade of experience as a finance contributor and editor, and has specialized in the credit card industry since 2015. Her credit card commentary is featured on national media outlets that include CNBC, MarketWatch, Investopedia, and Reader's Digest, among many others. She has worked closely with the world’s largest banks and financial institutions, up-and-coming fintech companies, and press and news outlets to curate comprehensive content and media. Ashley holds a bachelor's degree in multimedia journalism from Florida Atlantic University.

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Reviewer: Danielle Spurlin

Danielle Spurlin
Danielle Spurlin

With more than 10 years of accounting experience, Danielle Marshall has a deep understanding of many financial disciplines, including personal and commercial lending, retirement annuities, financial forecasting, and general bookkeeping. She has a bachelor's degree from the University of Florida's Fisher School of Accounting and currently manages all accounts receivable and payable for the parent company of CardRates.com. She works directly with credit card issuers and advertising partners to ensure our content meets compliance expectations and regulatory standards.

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Discover it® Secured Credit Card Review

Rated 4.0 /5.0 ★★★★

Secured credit cards play an essential role in the consumer credit market. They are easy to get and allow individuals to establish or rebuild credit with responsible use. One of the very best examples is the Discover it® Secured Credit Card. As with all cards from Discover® Bank, this one provides excellent value and rewards.

In this credit card review, we’ll examine the Discover it® Secured Credit Card and compare it to three leading alternatives. If you’re looking for a secured credit card, you’ll probably find one of these to be a perfect fit for your requirements.

Highlights of the Discover it® Secured Credit Card:

  • The Discover it® Secured Credit Card charges no annual fee.
  • It’s best for consumers with no credit or scores of 670 or less.
  • This card offers cash back rewards, an introductory Cashback Match, free FICO Score tracking, and the ability to upgrade to an unsecured product after a short probationary period of responsible card use.
  • Your security deposit can range from $200 to $2,500. The card has a 28.24% Variable APR for purchases and balance transfers.
  • You can redeem your cash back rewards at any time and in any amount. Your rewards never expire.

How to Qualify & Apply

You may qualify for the Discover it® Secured Credit Card if you:

    • Put down a refundable security deposit of at least $200, which sets your credit limit.

    • Are at least 18 years old.

    • Provide a valid Social Security number.

    • Have a US street address.

    • Provide information about your income and employment to assess your ability to afford the monthly minimum payments.

    • Have an active bank account.

    • Undergo a credit check. Discover performs a credit check, but you don’t need a credit history for approval. If you do have a credit score, the issuer recommends the card for people with FICO scores of 670 or less.

Applying for the card is easy and can be done on Discover’s website. You can access the application through the Apply Now button below:

Disclosure: When you apply through links on our site, we often earn referral fees from partners. For more information, see our ad disclosure and review policy.

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Discover it® Secured Credit Card Review

at Discover Card'ssecure website

BEST OVERALL RATING

★★★★

4.0

OVERALL RATING

  • No credit score required to apply.
  • No Annual Fee, earn cash back, and build your credit history.
  • Your secured credit card requires a refundable security deposit, and your credit line will equal your deposit amount, starting at $200. Bank information must be provided when submitting your deposit.
  • Automatic reviews starting at 7 months to see if we can transition you to an unsecured line of credit and return your deposit.
  • Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus earn unlimited 1% cash back on all other purchases.
  • Discover could help you reduce exposure of your personal information online by helping you remove it from select people-search sites that could sell your data. It’s free, activate with the mobile app.
  • Get an alert if we find your Social Security number on any of thousands of Dark Web sites. Activate for free.
  • Terms and conditions apply.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
10.99% Intro APR for 6 months
28.24% Variable APR
$0
New/Rebuilding

You can choose a card design when you formally apply. Discover does a hard credit check when you apply, but as mentioned, you don’t need any credit history to qualify. You must remit your deposit before Discover will send you the card. Discover allows cardmembers to own no more than two of its credit cards.

You can also seek preapproval for the card by submitting a short online form. Discover will perform a soft credit inquiry that won’t impact your credit score. Discover’s preapproval form requires only basic information, including your contact details, Social Security number, current annual gross income, and housing costs.

The bank doesn’t guarantee preapproval offers will result in final approval — you still must complete a full application. Preapproval offers expire after seven days. If the bank doesn’t have an offer for you, it will tell you why, and you can resubmit another preapproval request after eight days.

Benefits & Drawbacks to Consider

The Discover it® Secured Credit Card offers several important benefits and a few drawbacks, but generally the lowest number of drawbacks among its peers.

Benefits

    • Cash back rewards: You earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each calendar quarter, automatically. Plus, you receive unlimited 1% cash back on all other eligible purchases.

    • Cashback Match: New cardmembers automatically receive an unlimited dollar-for-dollar match of all their earned cash back posted through the end of their first 12 consecutive billing periods or 365 days, whichever is longer. Discover will add the matched cash back to your rewards account within two billing periods after the first year. The Cashback Match is only for the first year, and there is no limit to how much Discover will match.

    • Refundable deposit: Your security deposit is refundable after a number of months of responsible use.

    • No credit score required: You can qualify for the card even if you don’t have a credit score.

    • Introductory APR: The card offers new cardowners a  10.99% Intro APR (6 months) on balance transfers, after which the standard APR applies.

    • Low fees: There is no annual or foreign transaction fees for using the card. Also, there is no penalty fee for the first overdue payment.

    • Free credit score access: You can access your FICO® Credit Score for free.

    • Mobile app: Discover provides a full-featured mobile app that lets you manage your credit card anywhere.

    • Customer service: 100% US-based customer service is available 24/7.

    • Security features: The card offers several security features, including a $0 fraud liability guarantee, online privacy protection, and the Freeze it® on/off switch for your account.

Drawbacks

    • Security deposit requirement: You need to provide a refundable deposit, which equals your credit limit.

    • High APR: The card has a relatively high 28.24% Variable APR compared to some other secured credit cards.

    • Bonus reward limits: The card limits the bonus reward rate to specific categories and applies quarterly caps.

    • Fees: The card charges fees for cash advances, balance transfers, returned payments, and late payments after the first one.

    • Foreign acceptance: Foreign merchants may not accept Discover as widely as Visa® or Mastercard®.

Best Alternatives Worth a Look

These cards are similar to the Discover it® Secured Credit Card, and one also offers cash back. Their APRs, deposit requirements, and annual fees vary, so be sure to evaluate each one carefully.

OpenSky® Secured Visa® Credit Card Review

at Capital Bank N.A.'ssecure website

BEST OVERALL RATING

★★★★
4.0

OVERALL RATING

  • No credit check to apply. Zero credit risk to apply!
  • Looking to build or rebuild your credit? 2/3 of cardholders receive a 48+ point improvement after making 3 on-time payments
  • Extend your $200 credit line by getting considered for an unsecured credit line increase after 6 months, no additional deposit required!
  • Get free monthly access to your FICO score in our mobile application
  • Build your credit history across 3 major credit reporting agencies: Experian, Equifax, and Transunion
  • Add to your mobile wallet and make purchases using Apple Pay, Samsung Pay and Google Pay
  • Fund your card with a low $200 refundable security deposit to get a $200 credit line
  • Apply in less than 5 minutes with our mobile first application
  • Choose the due date that fits your schedule with flexible payment dates
  • Fund your security deposit over 60 days with the option to make partial payments
  • Join over 1.2 million cardholders who’ve used OpenSky to build their credit
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
25.64% (variable)
$35
Poor

The OpenSky® Secured Visa® Credit Card differs from the Discover it® Secured Credit Card in that it charges an annual fee. It does not provide rewards or introductory APRs. However, its regular APR is the lower of the two, it has a potentially higher credit limit ($3,000), and it doesn’t do any hard credit checks.

The two cards provide free credit monitoring, reporting to all three credit bureaus, and an upgrade path to an unsecured card. You can get this card even if you have poor credit.

BEST OVERALL RATING

★★★★
4.0

OVERALL RATING

  • No annual or hidden fees. See if you're approved in seconds
  • Building your credit? Using the Capital One Platinum Secured card responsibly could help
  • Put down a refundable security deposit starting at $49 to get a $200 initial credit line
  • You could earn back your security deposit as a statement credit when you use your card responsibly, like making payments on time
  • Be automatically considered for a higher credit line in as little as 6 months with no additional deposit needed
  • Enjoy peace of mind with $0 Fraud Liability so that you won't be responsible for unauthorized charges
  • Monitor your credit score with CreditWise from Capital One. It's free for everyone
  • Get access to your account 24 hours a day, 7 days a week with online banking to access your account from your desktop or smartphone, with Capital One's mobile app
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
30.74% (Variable)
$0
Limited, Bad

The Capital One Platinum Secured Credit Card shares some features with the Discover it® Secured Credit Card, including no annual fee and the possibility of transitioning to an unsecured card (although the specifics of the process and criteria may differ).

However, this Capital One card does not provide rewards or an introductory APR and has a higher regular interest rate. But it may allow you to get a $200 credit limit with a deposit as small as $49, and it accepts applicants with bad credit.

BEST OVERALL RATING

★★★★
4.0

OVERALL RATING

  • No annual or hidden fees, and you can earn unlimited 1.5% cash back on every purchase, every day. See if you're approved in seconds
  • Put down a refundable $200 security deposit to get a $200 initial credit line
  • Building your credit? Using a card like this responsibly could help
  • Enjoy peace of mind with $0 Fraud Liability so that you won't be responsible for unauthorized charges
  • You could earn back your security deposit as a statement credit when you use your card responsibly, like making payments on time
  • Be automatically considered for a higher credit line in as little as 6 months with no additional deposit needed
  • Earn unlimited 5% cash back on hotels and rental cars booked through Capital One Travel, where you'll get Capital One's best prices on thousands of trip options. Terms apply
  • Monitor your credit score with CreditWise from Capital One. It's free for everyone
  • Enjoy up to 6 months of complimentary Uber One membership statement credits through 11/14/2024
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
30.74% (Variable)
$0
Limited, Bad

As with the Discover it® Secured Credit Card, the Capital One Quicksilver Secured Cash Rewards Credit Card provides cash back rewards, but they are at a flat rate that applies to all eligible purchases and there are no caps on the amount of cash back you can earn. But its APR is higher, and it doesn’t offer a promotional APR to new cardmembers.

Otherwise, the cards are similar, with a $0 annual fee, a minimum $200 security deposit, and a path to transition to an unsecured card.

Cardholder Reviews Around the Web

Online reviewers are usually a tough crowd, but many have a soft spot for the Discover it® Secured Credit Card.

Duncan026 writes:

“I cannot recommend this card or Discover highly enough. They do send you a check for your deposit without asking if you have made all your payments on time. After four years of on-time payments, my limit is up to $9,000 [on the unsecured upgrade]. Stellar customer service.”

achen9526 is also a fan:

“The Discover it Secured is the only card worth using since it’s the only one of its kind to offer any rewards. The cherry on top is their Cashback Match once you have the card for a year. You’re essentially getting 2% on everything and 4% at gas stations and restaurants. My Discover it Secured graduated [to unsecured] after eight months.”

throwaway67318 offers some advice to Discover it® Secured Credit Card applicants:

“Put the ABSOLUTE BARE MINIMUM you can on the card. There’s no point putting any more money locked up in a security deposit when that money serves you much better in an emergency savings fund or an investment. I have never seen any evidence that larger deposits require longer to go unsecured with Discover, but I see the claim repeatedly. The only sure thing that will extend your graduation time for certain is overdue payments.”

Honestly, I could not find any criticism of the Discover it® Secured Credit Card on the online forums.

FAQs: What are the Deposit Requirements for the Discover it® Secured Credit Card?

The Discover it® Secured Credit Card accepts deposits ranging from $200 to $2,500. You must send in your deposit to receive final approval. Your deposited funds remain undisturbed unless you miss a payment — Discover can deduct the minimum payment from your deposit and reduce your credit limit accordingly.

Discover will refund your deposit if the account transitions to an unsecured account or closes. You can add money to the account, up to the limit, solely to secure your account. The bank does not pay interest on your security deposit.

Funds in Discover Bank Security Deposit Accounts receive insurance from the Federal Deposit Insurance Corporation (“FDIC”) up to the maximum allowable limits.

How Do I Build Credit with a Secured Card?

Credit card companies report your monthly payment behavior and current balances to the major credit bureaus: Equifax, TransUnion, and Experian. This information determines your credit history.

Paying on time and keeping unpaid balances low can help you raise your credit scores. Conversely, delinquent payments can significantly reduce your credit scores.

Secured cards help you establish a credit score since you can get them even if you have no credit history. You can also use secured credit cards to rebuild credit damaged by past errors.

Recent financial activities have the most impact on your credit scores, although items on your reports may remain for two to 10 years. Over time, the effects of negative marks on your score decline.

The most important habit you can develop for improving your credit is never to miss a payment date. Nearly all credit cards provide a grace period of at least 21 days from the end of a billing period. You will help build credit by paying at least the minimum amount due before the due date.

FICO Score Factors
Payment history is the most important credit scoring factor.

It’s OK to send in a minimum payment if you can’t afford more. However, repeatedly doing so may snowball your accrued interest and put you into a debt spiral that’s difficult to escape. It will also raise your credit utilization ratio (CUR, equal to the amount you owe divided by your credit limit). Keeping your CUR below 30% can help your score.

The best policy is to pay your entire balance each month. Doing so will let you avoid interest charges and build your credit faster.

How Long Does It Take for the Discover it® Secured Credit Card to Become Unsecured?

The transition time from a secured to an unsecured credit card varies depending on the card issuer’s policies and the cardholder’s credit management. For the Discover it® Secured Credit Card, Discover periodically reviews your account starting at seven months to determine if you qualify for an unsecured card.

This graduation process involves reviewing your credit history, payment patterns, and overall creditworthiness. If you qualify, Discover will refund your security deposit while maintaining the credit account. However, this timeline and process can vary, and Discover does not guarantee it will upgrade your account.

How Do I Transfer Balances to the Card?

The Discover it® Secured Credit Card provides new cardmembers with a 10.99% Intro APR (6 months) on balance transfers, after which the card’s regular APR applies. It takes at least 14 days after opening the account to process balance transfer payments from your other accounts. Thereafter, Discover requires up to four days to process a transfer request.

When requesting a transfer, verify your Discover card’s available balance to see the amount of your other card’s current balance you can accept. Check whether you are within the reduced APR promotional period, or else you’ll have to pay a higher interest rate on the transferred amount.

You can request balance transfers via phone or online. Submit the required information, including the other card’s account number and the transfer amount. Discover charges a fee for each balance transfer transaction.

Discover may automatically approve the transfer, but there may be a delay if a human must review the request. You’ll receive a notification when the transaction is completed. You should check the balances on both cards to verify the transfer took place correctly.

You may decide to close the other card account if its new balance is zero. Before you do so, consider that it may harm your credit score by increasing your credit utilization ratio and reducing your average credit account age.

Does Discover Issue Good Credit Cards?

Discover is the country’s fourth-largest payment network after Visa®, Mastercard®, and American Express®, with more than 300 million cardmembers worldwide. We consider its credit cards to be of the highest quality for the following reasons:

    • Low fees: Discover cards do not charge annual or foreign transaction fees, and their overall fee schedules are competitive.

    • Introductory APRs: Most Discover cards offer an introductory purchase and/or balance transfer APR to new cardmembers for a set number of months after opening the account, after which the APR reverts to the regular rate.
    • Rewards: You get cash back or mile rewards from Discover cards. Plus, new cardmembers get a Cashback (or Miles) Match of all the cash back they earn during their first year as a new cardmember. You collect the match after the end of the first year, and there is no maximum reward amount. You can redeem your rewards for deposits into a savings or checking account, gift cards, paper checks, Amazon or PayPal purchases, or donate them to select charities.

    • Fraud protection: All Discover cards come with $0 liability against fraud and theft. In addition, they provide online privacy protection and the Freeze it® on/off switch for your account.

    • Wide acceptance: Discover is the most trusted credit card issuer, ranked highest for quality, privacy, ethics, and customer service. Merchants welcome Discover cards at 99% of US locations that accept credit cards.

    • Competitive interest rates: Most Discover cards offer a competitive range of variable APRs.

    • Reasonable credit limits: You may have a credit limit as low as $200 or as high as $20,000 or more, depending on your creditworthiness and other factors. For the Discover it® Secured Credit Card, the $200 to $2,500 credit limit equals the amount of your security deposit.

Discover offers cards for consumers of all credit stripes, ranging from excellent credit to no credit history.

Can I Be Denied For the Card?

Any credit card issuer, including Discover® Bank, may decide to deny your application. The Discover it® Secured Credit Card is fairly easy to qualify for. You must meet the basic requirements for age, residence, credit score, income, and expenses, but there are possible roadblocks, including:

    • An active or recent bankruptcy

    • An extremely low credit score that indicates a significant risk of default

    • Errors on your application

    • Insufficient or unverifiable income

    • Your identity is unverifiable

    • Recent repossessions, collections, or foreclosures

When an issuer rejects your application, it must, by law, send you an Adverse Action Notice (AAN) that describes why you did not qualify for a credit card. It also contains some tips on how to improve your credit report and score to change future application outcomes.

If you receive an AAN, consider creating a plan to improve your credit score over time. In many cases, this will require you to simply be patient and wait for current negative items to age off of your credit profile. Make sure you pay your bills on time and keep your debt-to-income ratio relatively low (well below 36% if possible).

This Card May Be For You If You’re…

    • New to credit and looking to establish a credit history

    • Rebuilding credit after past financial difficulties or mistakes

    • Seeking a secured card with cash back rewards and no annual fee

    • Interested in a card that periodically reviews for potential transition to an unsecured card

    • Able to provide a refundable security deposit that sets your credit limit

The Discover it® Secured Credit Card rightly earns one of our top ratings for secured credit cards. With no annual fee, cash back rewards, a relatively low APR, and a quick path to becoming an unsecured card, Discover’s secured credit card is worthy of a spot in your wallet.

About the Author

Eric Bank
Eric Bank Finance Expert

Eric Bank is an M.B.A. who has covered financial and business topics since 1985, appearing regularly on Credible, eHow, WiseBread, The Nest, Zacks, Chron, BadCredit.org and dozens of other outlets. Eric specializes in taking complex subject matters and explaining them in simple terms for consumer audiences, particularly in the world of personal finance. Eric holds a Master's in Business Administration from New York University and a Master's in Finance from DePaul University.

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Eric Bank