Though the Discover it® Secured Credit Card allows you to earn cash back on purchases, there are only two spending categories that earn elevated rewards, and there is also a spending limit on these categories, so your earning potential is severely restricted if you start out with a decent credit limit.
The interest rate for purchases is also a bit steep, and the intro APR offer only extends to balance transfers. Plus, besides a few credit-building features, there aren’t many standout perks that would make this card a top contender amongst other cards.
Rewards: Limitations on spending
You may only spend a set amount on gas and restaurant purchases each quarter before you are subject to a spending restriction. Your high cash back rate in these two categories is slashed in half, limiting how much you can earn in the long term. However, if you begin with a low credit limit as a result of making the minimal deposit, this may not have much of an impact on you in this particular situation. If you want to earn infinite points on purchases with no restrictions, this may be insufficient for you.
In quick comparison, the Capital One Quicksilver Secured Cash Rewards Credit Card allows you to earn unlimited cash back on all purchases, but on the flip side, you would be subjected to a higher APR than with the Discover it® Secured Credit Card, so your rewards are still limited, albeit in a different way.
Security deposit: Average compared to similar cards
Though this card’s $200 minimum security deposit and $2,500 maximum deposit offer an accessible entry point and a decent credit limit if you decide to max out your deposit, it’s not necessarily a standout feature. There are other similar cards that offer a higher credit limit to applicants, such as the OpenSky® Secured Visa® Credit Card, which allows you to put down a deposit of up to $3,000. Still, you’d have to pay an annual fee in order to obtain the potentially higher credit limit with the Open Sky Secured Card.
Overall, you have options if you rather have a higher credit limit, but you would have to weigh the pros and cons of having no annual fee versus the opposite scenario.
APR: A bit steep compared to similar cards
Unfortunately, the card’s APR is well above the lower-interest credit cards to consider if you think you may need to carry a balance.
And although the card’s intro APR on balance transfers is much less common among credit-building cards (you’ll get a 10.99 percent intro APR on balance transfers for your first six months, then 26.74% Variable APR; 3 percent intro balance transfer fee, up to 5 percent after the date listed in your application), you can’t use this offer toward new purchases. That’s quite a disadvantage, especially when you can only earn rewards on purchases and not have time to pay them off without interest. Also, transferring a balance to a secured card may not always be the best strategy. Depending on the size of your balance and your APR, you may be better off using the money you would have used to cover your deposit to pay down debt instead.
Perks: Unnoteworthy besides credit-building features
For a card that’s designed for cardholders with limited or damaged credit, it shouldn’t come as a surprise that its extra perks are limited. It does have the standard secured card features, like $0 fraud liability and credit education resources — both of which are big assets credit builders — but other than that, there isn’t anything remarkable about the Discover it® Secured Credit Card’s benefits.