Discover it® Secured Credit Card Review

Secured credit cards have become an increasingly popular tool for those looking to build or rebuild their credit history. Among the myriad options available, the Discover it® Secured Credit Card stands out for its robust rewards program, lack of annual fees, and valuable perks tailored to those with no credit history or poor credit scores. This comprehensive review will delve into the key features, pros and cons, benefits, and overall value of the Discover it® Secured Credit Card, providing you with a thorough understanding to make an informed decision.

Discover it® Secured Credit Card Review

The Discover it® Secured Credit Card is designed for individuals who are new to credit or are working to improve a damaged credit score. Secured credit cards require a refundable security deposit, which typically serves as your credit limit. This card from Discover, however, goes beyond the basics by offering a compelling rewards program and a variety of consumer protections.
Rewards Program:
– 2% Cash Back: At gas stations and restaurants on up to $1,000 in combined purchases each quarter.
– 1% Cash Back: On all other purchases.
– Cash Back Match: Discover will automatically match all the cash back you’ve earned at the end of your first year. This unique feature effectively doubles your rewards for the first 12 months.
APR and Fees:
– Purchase APR: 28.24% Variable
– Intro Balance Transfer APR: None
– Balance Transfers APR: 10.99% for the first 6 months, then 28.24% Variable
– APR for Cash Advances: 29.99% Variable
– Annual Fee: $0
– Balance Transfer Fee: 3% intro fee on balances transferred by June 10, 2024, and up to 5% fee for future balance transfers
– Cash Advance Fee: Either $10 or 5% of the amount of each cash advance, whichever is greater
– Penalty Fees: None for the first late payment, up to $41 thereafter
Other Features:
– No Foreign Transaction Fees: Ideal for international travel.
– Purchase Protection: Covers eligible purchases against damage and theft.
– Fraud Protection: Ensures you’re not held responsible for unauthorized purchases.
– Free Credit Score: Access your FICO® score for free each month.
– Credit Line Increase: Potential to upgrade to an unsecured card based on responsible use.

Discover it® Secured Credit Card Key Takeaways

The Discover it® Secured Credit Card offers a robust mix of rewards, consumer protections, and opportunities for credit growth. Here are the key takeaways:
– Generous Rewards: Earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, and 1% on all other purchases. Plus, get a dollar-for-dollar match of all cash back earned in your first year.
– No Annual Fee: Enjoy all the card’s benefits without paying an annual fee.
– Credit Building: Designed for those with no credit history or poor credit (0-579), making it an excellent tool for building or rebuilding credit.
– Valuable Perks: Free access to your FICO® score, no foreign transaction fees, and robust purchase and fraud protection.
– High APR: The card carries a high variable APR of 28.24% for purchases and balance transfers after the introductory period.

Discover it® Secured Credit Card Pros and Cons

Pros:

1. Multiple Rewards Programs: The card offers a tiered rewards system, with 2% cash back at gas stations and restaurants and 1% on all other purchases. The first-year cash back match is particularly valuable.
2. No Annual Fee: There is no cost to carry the card, making it an affordable option for credit building.
3. Monthly Credit Reviews: Your account is reviewed monthly, which can lead to an upgrade to an unsecured card based on your credit behavior.
4. Double Cash Back for the First Year: Discover will match all the cash back you’ve earned at the end of your first year, effectively doubling your rewards.
5. No Foreign Transaction Fees: Travel without worrying about extra costs on your purchases abroad.

Cons:

1. High APR: The variable APR of 28.24% is quite high, which can be costly if you carry a balance.
2. Minimum Deposit Requirement: A security deposit is required, which can be a hurdle for some applicants.
3. Limited International Acceptance: Discover cards are not as widely accepted internationally as Visa or Mastercard.

Discover it® Secured Credit Card Benefits

Credit Building:

One of the primary benefits of the Discover it® Secured Credit Card is its focus on helping cardholders build or rebuild their credit. Discover reports your payment history to all three major credit bureaus—Experian, Equifax, and TransUnion—allowing you to establish a positive credit history with responsible use. Additionally, cardholders have access to their FICO® score for free each month, enabling them to track their progress.

Rewards Program:

The rewards program is a standout feature, especially for a secured credit card. Earning 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter is a significant benefit for those who spend frequently in these categories. The 1% cash back on all other purchases ensures that you earn rewards on every transaction. The first-year cash back match can result in substantial rewards, effectively doubling your earnings during the first 12 months.

No Annual Fee:

Many secured credit cards charge an annual fee, but the Discover it® Secured Credit Card does not. This makes it a cost-effective option for those looking to build credit without incurring additional costs. The lack of an annual fee ensures that more of your money can be directed toward paying off your balance and earning rewards.

Consumer Protections:

Discover offers a range of consumer protections that add value to the card. These include purchase protection, which covers eligible purchases against damage and theft, and fraud protection, which ensures you are not held responsible for unauthorized charges. The card also offers an extended warranty on eligible purchases, providing additional peace of mind.

Travel Benefits:

The card’s lack of foreign transaction fees makes it an attractive option for international travelers. While Discover is not as widely accepted internationally as Visa or Mastercard, it has been gaining acceptance in more countries. The no-fee structure means you can make purchases abroad without worrying about additional costs.

Flexibility:

The Discover it® Secured Credit Card offers flexibility in several ways. First, there is no penalty APR, which means your interest rate will not increase if you miss a payment. Additionally, there is no fee for the first late payment, although subsequent late payments will incur a fee of up to $41. The card also provides the option to upgrade to an unsecured card based on responsible use, offering a path to greater credit flexibility.

Customer Service:

Discover is known for its exceptional customer service, which is available 24/7. Cardholders can manage their account and pay their bill online, making it easy to stay on top of payments and monitor spending. Discover’s customer service representatives are available to assist with any questions or issues that may arise.

Additional Perks:

The card offers several additional perks that enhance its value. These include:
– Free Social Security Number Alerts: Receive alerts if your SSN is found on any of thousands of Dark Web sites.
– Account Freeze: Quickly freeze your account to prevent new purchases, cash advances, and balance transfers in seconds if you misplace your card.
– Overnight Card Replacement: Get a replacement card shipped overnight for free if your card is lost or stolen.

Conclusion

The Discover it® Secured Credit Card is a compelling option for individuals looking to build or rebuild their credit while earning rewards. Its lack of an annual fee, generous rewards program, and valuable consumer protections set it apart from many other secured credit cards on the market. The first-year cash back match is an especially attractive feature, effectively doubling your rewards during the first 12 months.
While the card does have a high variable APR, this is common among secured credit cards, and responsible use can mitigate the impact. The requirement for a security deposit may be a hurdle for some, but it serves as a stepping stone to building a positive credit history.
Overall, the Discover it® Secured Credit Card offers a robust mix of benefits, rewards, and protections, making it an excellent choice for those with no credit history or poor credit scores. Its focus on helping cardholders build credit, combined with its lack of an annual fee and generous rewards program, makes it a standout option in the secured credit card market.
For individuals committed to building or rebuilding their credit, the Discover it® Secured Credit Card provides a valuable tool that can pave the way to greater financial flexibility and improved credit health.