The Discover it Secured is one of the best picks around for anyone who wants to build or rebuild credit. You’ll earn 2% cash back at gas stations and restaurants on up to $1,000 of spending each quarter, plus unlimited 1% cash back on all other purchases. That’s unheard of among secured cards.
An automatic cash-back match at the end of the first year is an extra bonus. Because the card is geared toward people aiming to improve their credit score, Discover takes a more lenient approach when it comes to credit qualifications.
That doesn’t mean that every application is guaranteed approval. But if you are denied, Discover will tell you why.
- Automatic upgrade to an unsecured card when eligible
- Rare access to rewards
- First late fee waived
- End-of-year cash-back match
- No foreign transaction fee
- Mediocre maximum credit limit
- Low cap on rewards
- Automatic upgrade to an unsecured card when eligible: The Discover it Secured Card does automatic monthly reviews starting at eight months to see if your account qualifies to “graduate.” With responsible account management, you will be upgraded to an unsecured card. All card terms will stay the same, and your deposit will be returned.
- Rare access to rewards: It’s satisfying to see extra cash come your way when you’re working hard to establish credit, and it’s refreshing that Discover doesn’t reserve rewards for its unsecured customers only.
- First late fee waived: If you’re new to credit cards or just getting back on your feet, paying a credit card bill might be new for you, so it’s nice that Discover doesn’t charge a fee the first time you miss a payment due date. That said, don’t be late—the goal of a secured card is to prove that you can use credit responsibly, and late payments will have a negative impact on your credit file.
- End-of-year cash-back match: Like it does on other cards, Discover doubles all of the cash-back rewards earned after your first 12 billing periods. The matching reward will automatically show up in your account one or two billing periods later. (More on this below.)
- No foreign transaction fee: The Discover it Secured is one of the few secured cards that won’t charge fees for purchases made abroad, a big plus for travelers.
- Mediocre maximum credit limit: If you have the means to pay a large deposit, you could get a higher credit limit on another card, such as the Wells Fargo Secured Card.
- Low cap on rewards: The 2% cash back is far better than what most secured cards offer, but you’ll only get that rate on the first $1,000 you spend on gas and dining out each quarter
Discover it Secured Card Sign-Up Bonus
A secured card with rewards is impressive enough, but a sign-up bonus is very unusual. At the end of your first year with the card, Discover will double all the cash back you’ve earned so far. So if you earned $200, Discover would match it with another $200.
Using average U.S. household spending from the Bureau of Labor Statistics as a base, we estimate a typical user would spend $18,223 on this card each year. That means you’d earn about $222 in cash back.
Since there’s no limit to how much you can earn with this card—or how much Discover will match in the first year—this unconventional bonus has lots of upside potential.
It’s also great for people who might not otherwise meet the spending or minimum credit requirements of a card offering a traditional sign-up bonus (where you get $300 for spending $3,000 in the first three months, for instance.) With this card, you have 12 months to earn rewards eligible for the bonus.
Earning Points & Rewards
You’ll earn 2% cash back at gas stations and restaurants on up to $1,000 of spending each quarter, plus unlimited 1% cash back on all other purchases. Those are superior earnings for a secured card, and are even on par with some entry-level unsecured credit cards.
Cash-back rewards never expire and can be redeemed in any amount. At the end of year one, Discover also doubles whatever you’ve earned.
Even though your goal is to move away from secured cards for good once you’re established, the rewards on this card provide solid short-term value. And, if you move to the unsecured version of the card, you can continue earning rewards until you feel ready to shop around for other products.
Discover it Secured rewards come in the form of cash back, meaning they can be redeemed for cash at any time, in any amount, as a statement credit or via transfer to a bank account. You can also use your cash back when checking out at Amazon.com if you link your Discover card to your Amazon account and use the rewards for the purchase.
Or, you can redeem for gift cards or as a donation to select charities. Unlike other rewards cards, the Discover it Secured has no travel redemption options.
If you close the account or are inactive for 18 months, Discover will automatically credit your account with your cash-back balance.
How To Get The Most Out Of This Card
Don’t lose sight of what the card’s true purpose is: to improve credit. While the rewards are an excellent fringe benefit, avoid using a large portion of your credit limit (which will be between $200 and $2,500) while you’re trying to up your score.
That’s because credit utilization, or how much available credit you use, is a key factor in determining your credit score. Experts recommend keeping it as low as possible—definitely below 30% of your limit at any point.
Use the card in moderation—perhaps stick with gas and dining purchases, since those earn higher rewards. But most importantly, be vigilant about paying off your bill in full each month. With its high APR, carrying a balance for just a month or two on this card could wipe out any cash-back earnings.
In four of the last five years, J.D. Power ranked Discover highest for customer satisfaction among U.S. credit card companies. Discover’s 100% U.S.-based customer service is available 24/7 by phone or online, and you can pay your bill up to midnight (ET) the day it’s due.
Cardholders also get their FICO credit score for free on monthly statements or can access it by logging in to their Discover account online. That’s especially nice when you’re trying to build your credit.
Protecting your personal information is important for everyone, but especially if you’re building credit. Errors on your credit report could put your score at further risk.
Discover offers free alerts if your Social Security number is shared on the dark web, as well as any time new activity appears on your credit report. What’s more, should something suspicious happen or you misplace your card, you can freeze your account in seconds either via the mobile app or website.
If your card is lost, Discover will mail you a replacement overnight within the U.S. Like most issuers, Discover has $0 fraud liability: If there are unauthorized purchases on your card, you won’t be on the hook for them.
Discover it Secured’s Fees
The card stands out from other secured credit cards in that it does not charge an annual fee, foreign transaction fee, or late fee the first time you pay after the due date. Plus, paying late won’t raise your APR.