Is a Discover Card a Secured Credit Card?
Find out if Discover offers secured credit cards. Learn how these cards function as a powerful tool to establish or rebuild your credit history effectively.
Credit cards serve as a common financial tool, yet individuals with limited or no credit history often encounter challenges in accessing them. Building a credit profile is a gradual process, and traditional unsecured credit cards typically require an established credit score for approval. Discover’s secured credit card offerings address this need, providing a pathway for credit building.
What is a Secured Credit Card?
A secured credit card functions like a traditional credit card but requires a refundable cash deposit as collateral. This deposit determines the card’s credit limit, providing security for the issuer in case of payment defaults. For instance, a $200 deposit typically results in a $200 credit limit.
The card operates for everyday purchases similar to an unsecured card, allowing users to make transactions up to their set credit limit. Secured credit card activity, including payments and balances, is reported to major credit bureaus. This allows individuals to establish or rebuild a positive credit history through responsible use.
Discover’s Secured Credit Card: The Discover it Secured
Discover offers a secured credit card, specifically the Discover it Secured Card, designed for individuals looking to build or rebuild their credit. This card requires a refundable security deposit, which sets the credit line, with a minimum deposit of $200. Deposits can range up to $2,500, with credit limits determined by income and ability to pay.
The Discover it Secured Card offers a cash back rewards program, a feature uncommon for secured cards. Cardholders earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, and 1% cash back on all other purchases. The card has no annual fee. Discover conducts automatic reviews, starting as early as seven months, to determine if the card can transition to an unsecured line of credit, at which point the deposit is returned.
How to Apply for the Discover it Secured Card
Applying for the Discover it Secured Card begins by visiting Discover’s official website. The online application requires personal information, including name, address, Social Security number, and income details. Applicants must be at least 18 years old, a U.S. resident, and have a U.S. bank account.
During the application, you select your desired security deposit amount, starting at the $200 minimum. Discover requires your bank routing and account numbers to facilitate the deposit. Upon approval, the card arrives within two weeks.
Maximizing Credit Building with Your Discover it Secured Card
To build credit with the Discover it Secured Card, consistent responsible usage is important. Making all payments on time is the most important factor for a positive credit history, as payment history accounts for a significant portion of credit scores. Paying at least the minimum amount due by the statement due date is necessary, but paying the full balance each month avoids interest charges and helps maintain a healthy credit profile.
Keeping your credit utilization low also impacts your credit score. This means using a small percentage of your available credit, ideally 30% or less, to demonstrate responsible credit management. For example, with a $200 limit, maintaining a balance under $60 is advisable. Consistent positive behavior, including on-time payments and low utilization, can lead to the Discover it Secured Card graduating to an unsecured product, often with a deposit refund and potential credit limit increase.