The Discover it® Secured Credit Card Review: Is It A Good Value?

The Discover it® Secured Credit Card Review: Is It A Good Value?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

Citi is an advertising partner. Info about the Discover it® Secured has been collected independently by ValuePenguin. The issuer did not provide the details, nor is it responsible for their accuracy.

Discover has a great secured credit card option: the Discover it® Secured. The card provides both the ability to earn cash back rewards on every purchase, as well as the chance to establish/re-build one’s credit history. These features, combined with the fact that the card has no annual fee, makes the Discover it® Secured one of the best credit cards for people with bad credit.

Good For…Bad For…
  • Rebuilding one's credit history
  • Carrying a balance month-to-month
  • Earning cash back rewards
  • Getting an extended credit limit

Review: Is the Discover it® Secured Good For Rebuilding Credit?

Very few credit cards for people with bad credit will offer as much as the Discover it® Secured. The card provides users with as much as 2% cash back restaurant or gas purchases up to a combined $1,000 in purchases each quarter, and an unlimited 1% back on all else. Usually, having a subprime credit score means you have to settle for less than stellar options, but the Discover it® Secured has changed up the secured credit card scene in a major way.

We recommend individuals only charge purchases to it that they can afford at the end of each month. Otherwise, any positive effects of the cash back rewards will be eaten away by interest fees, and you will be walking away with a net-loss.

Bottom Line: The Discover it® Secured is one of the best credit cards for rebuilding credit.

Discover it® Secured Benefits & Features

Unlike a lot of secured credit cards, the Discover it® Secured comes with a rewards program. Cardmembers get 2% cash back at restaurants and gas stations up to $1,000 in combined purchases each quarter. All other spending will earn an unlimited 1% back. In this way, the Discover it® Secured it is very similar to the Discover it® chrome.

In lieu of a traditional signup bonus, the Discover it® Secured will double all the cash back you earn at the end of your first year, if you are a new cardmember. This is one of the best credit card bonuses we’ve see, though your mileage may vary. This bonus is proportional to how much you put into spending on the card. In the realm of secured credit cards, however, bonuses are rare and few between. Therefore, even a small cash back reward can be great for individuals with bad credit.

According to Jerry Young, Director of Acquisition at Discover, after 8 months as a Discover it® Secured cardmember, cardholders will be considered for an upgrade to one of the other Discover it cards. In order to qualify, cardholders will need to exhibit good financial behavior – paying their bills on time, etc. If approved, the security deposit will be returned to users and a new card will be mailed to them. The transition will be seamless, and all the old rewards users would have earned up until this point will carry over to their upgraded card.

Secured Credit Card Features

Cardholders must deposit at least $200 to their Discover it® Secured account. Your credit limit will be equal to the amount of money you deposit. Afterwards, this card will operate just as any other credit card. You are not allowed to use your security deposit towards your monthly payments. Instead, the security deposit will be used to pay off your balance in the even that you become delinquent in your obligations. As long as your account remains in good standing, and you pay off all your debts, you can always get the security deposit back by closing your account.

The Discover it® Secured reports your payments to all three major credit bureaus – TransUnion, Equifax, and Experian. This is a key factor in choosing a credit card for rebuilding credit. Some secured cards, especially ones from small and regional banks, may not report secured bank accounts to the proper institutions. In such a case, your good credit history will go unrewarded. We urge consumers to always verify whether a card reports to the credit bureaus before applying.

How Does the Discover it® Secured Compare Against Other Options?

In order to make the best decision, consumers should apply for a credit card only after weighing several different options. This section explores how the Discover it® Secured performs when compared to some of its leading competitors.

Discover it® Secured vs Capital One® Secured Mastercard®

The Capital One® Secured Mastercard® is another top-notch secured credit card that may be perfect for individuals in need of a higher credit limit. While most secured credit cards will extend a credit limit equal to one’s security deposit, Capital One provides the option to give users a little extra credit line. If you deposit more than your minimum required amount you can get your credit line extended even further. The minimum amount will vary between $49, $99, and $200 (note, you’ll need access to an authorized bank account to make your security deposit). Unlike the Discover it® Secured, the Capital One® Secured Mastercard® isn’t a rewards credit card. Therefore, you will not receive any money back by using the card. As long as you don’t need the extra credit line the Capital One® Secured Mastercard® offers, we recommended the Discover it® Secured from a pure value standpoint.

Discover it® Secured vs Citi® Secured Mastercard®

The Discover it® Secured is a much better offer than the Citi® Secured Mastercard®. The latter comes with no rewards. One possible advantage of the Citi® Secured Mastercard® is the fact that the Mastercard is generally more accepted worldwide than Discover. If you travel, and would like to use your credit card outside of the U.S. it will be easier to do so with the Citi® Secured Mastercard®. All else being equal, we recommend consumers favor the Discover it® Secured over the Citi® Secured Mastercard® option.

Information about the Capital One® Secured Mastercard® and the Citi® Secured Mastercard® has been collected independently by ValuePenguin. The issuer did not provide the details, nor is it responsible for their accuracy.

Joe Resendiz

Joe Resendiz is a former investment banking analyst for Goldman Sachs, where he covered public sector and infrastructure financing. During his time on Wall Street, Joe worked closely with the debt capital markets team, which allowed him to gain unique insights into the credit market. Joe is currently a research analyst who covers credit cards and the payments industry. He earned a bachelor’s degree from the University of Texas at Austin, where he majored in finance.

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How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates here are ValuePenguin's alone, not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).