Discover it Secured Credit Card: Is It Worth It?

If you’ve made some financial missteps in the past or are just beginning your credit journey, building or rebuilding your credit can feel overwhelming. In these cases, finding the right financial tools can be a real game-changer. One such tool is the Discover it® secured credit card designed to help you establish or improve your credit score while offering some of the perks usually reserved for unsecured cards. This makes the Discover secured credit card a popular option for those serious about shaping their financial future.

But popularity doesn’t always mean it’s the best option for everyone. In our Discover secured credit card reviews, we’ll dive deep into what this card has to offer and whether it’s the right move for you.

General Discover it Secured Credit Card Review

Unlike traditional credit cards, secured cards require an upfront security deposit, which acts as collateral for your account. This setup makes them accessible to people with limited or damaged credit histories, offering a path to improve creditworthiness over time. To get started, you’ll need to back your Discover it card secured by a cash deposit, typically ranging from $200 to $2,500.

As per Discover’s guidelines, the deposit amount also serves as your credit limit, based on your income and ability to repay. The good news? The deposit is refundable if you decide to close your account or if Discover upgrades you to an unsecured card. Speaking of which, after the 7th month of your active card use, the bank will initiate regular checks of your credit report for any delinquencies, charge-offs, and bankruptcies. If they find you're in good standing, they’ll refund your deposit and transition your card to an unsecured one.

In terms of functionality, your secured credit card from Discover allows making purchases just like you would with any other credit card. You’ll receive a monthly statement and will need to make at least the minimum payment by the deadline. Paying off your monthly balance in full will help you avoid interest charges and demonstrate responsible credit usage, which will positively impact your credit score over time.

Strengths of the Discover Secured Credit Cards

The Discover it® secured credit card confidently stands out by blending the best of both worlds: strong credit-building features and perks often seen with unsecured cards. Here’s a closer look at what makes this card a solid option for many.

• Attractive cashback program: This is one of a few secured cards that lets you earn cashback on purchases. You’ll get 2% cash back on up to $1,000 in combined purchases at gas stations and restaurants each quarter, plus 1% cash back on all other purchases. On top of that, your cashback never expires, and you can redeem your rewards at any time in any amount—even at Amazon.com or when using PayPal.
• First-year cashback match: Starting in June 2024, Discover further sweetens the deal with a unique offering for new cardholders. At the end of your first 12 months, they automatically match all the cash back you’ve earned, doubling your rewards. This feature can be particularly beneficial as you work to build your credit during that first year.
• No annual fee: You won’t have to worry about this additional expense and can focus on improving your credit without being penalized by extra charges—especially helpful for those who are just starting out or recovering from financial difficulties.
• Free FICO score checkup: You can track your credit-building progress by accessing your FICO score for free through Discover’s online portal. This helps you keep an eye on how your credit behavior is impacting your score over time.
• Strong security and fraud protection: Like all Discover cards, the secured version comes with 24/7 fraud monitoring, free overnight card replacement, and zero liability for unauthorized purchases—giving you peace of mind.

Weaknesses of the Discover Secured Credit Cards

Of course, no card is perfect. Despite the abundance of perks it offers cardholders with lower-than-average credit scores, a Discover credit card secured by cash deposit has its drawbacks, too. Check it out to see if the pluses outweigh the minuses and if the card is worth it in the end.

• Security deposit requirement: As with all secured cards, the required cash deposit can be a barrier, especially for those who may not have the funds readily available, even if the amount involved is $200 to $500. Plus, this money is tied up until it’s refunded, so you can’t use it for other financial needs.
• Limited credit line: As we’ve already stated, your credit limit is directly bound to your deposit, which could limit your purchasing power. Besides, if you need to increase your limit, you’ll need to provide additional funds to increase your deposit—something that may not always be feasible.
• High APR: The card comes with a variable 28.24% APR on purchases and balance transfers, and a 29.99% APR on cash advances, which is on the higher side. While the intro 10.99% APR for the first six months might offer some relief for balance carriers, you’ll have to pay significant interest charges over time.

Who Should Consider the Discover it® Secured Credit Card?

This card from Discover is a powerful financial tool designed with specific users in mind. While it offers several advantages for building or rebuilding credit, it’s not the best fit for everyone. To complete our Discover it Secured Card review, here’s who might benefit the most:

• New to credit: If you’re a young adult, recent immigrant, student, freelancer, or someone who’s never used credit before, this card provides a solid starting point for building credit and qualifying for more advanced financial products down the road.
• Rebuilding credit: If you’ve faced financial challenges or situations that hurt your credit score, this card can help you get back on track and restore your good financial standing over time.
• Cashback seekers: The cashback rewards on everyday purchases teamed with other compelling offers ensuring great options for cutting down costs and saving funds make this card a coveted item for budget-conscious consumers looking to get rewarded for their spending.

On the flip side, a Discover it® Secured Card might be ideal for:

• Cash-strapped individuals: If you’re unable to afford the security deposit, the upfront cost can be a significant hurdle, making it tough to unlock the card’s benefits.
• Balance carriers: If you tend to struggle to pay off an ongoing balance each month, high interest charges can quickly outweigh any earned rewards and make it harder to pay off debt.