How to use the card
As it happens with any secured credit card, you have to fund the Discover it® Secured Credit Card with a deposit. You may pay any amount within the range of $200 – $2,500, and this will provide you with an equal credit line. Remember you need this card exclusively for bringing your credit score up. Even a low deposit of $200 may suit this purpose. Following these tips may lead you to a better score.
- Keep your card spending as low as one-fifth of your deposit, for instance, $40 out of $200 or $100 out of $500.
- Make sure you pay off your balance in full and on time. Note that you may set up automatic payments from your checking account.
Discover starts reviewing your activities across all of your credit products after 7 months of using the card. If your spending is low and all payments are on time, you may move to an unsecured card. As soon as it becomes possible, you receive a notification email and your deposit comes back into your checking account.
The upgrade means that the bank considers you a responsible credit card user. But your real goal is to have a good or even excellent credit score proving your creditworthiness to any lender. That is why Discover not only reviews your current credit activities itself but also sends regular reports to the three national bureaus Equifax, Experian and TransUnion.
Your every action, as it relates to the secured credit card, contributes to your credit history and may affect your score in either positive or negative way. Actually, Discover will forgive you one late payment without charging late fees and reporting to the credit bureaus. But only one. So use your card in a wise way and regularly check your FICO score. It is available free of charge online and on a monthly report.
To qualify for this card, you should be at least 18 years old and have a checking or savings account in the US to pay a deposit. Also you need to have an address in the US and a Social Security Number (SSN). You may have no credit history at all or make just first steps to build it.
Note that Discover closely checks an available credit history for any serious credit damage. This card is probably not your option if you are struggling to recover from a recent bankruptcy. Not all applications get approved.
How much it costs
What makes this offer so attractive among other secured credit cards is its cash back program. Discover pays you 1% cashback on all purchases (up to $1 000 per quarter) and 2% cashback on your spendings at gas stations and restaurants. If you are a new cardmember, Discover will double your cashback after the first year. The earned cash back never expires, and you may bring it with you to an unsecured card after the upgrade.
Discover offers various ways on how to redeem your cashback. You may deposit it to your bank accounts, make donations to certain charities, pay with cashback bonus at certain online retailers or redeem it for gift cards and instant e-Certificates from Discover’s partners.
What’s more, there is no annual fee. Avoid carrying balance, and this card will cost you $0.
The bottom line
Of course, when your credit score is good enough, you may access credit cards with much more attractive perks. But to get there, start with the Discover it® Secured Credit Card.