Is the Discover it® Secured Credit Card worth it?

Bad credit can affect you in many ways — from limiting your lending options to preventing you from renting an apartment or even getting a job, in some cases. Similarly, having no credit history can cause problems because lenders don’t have enough information to judge whether you’ll pay back your loan.

A secured credit card can help you build or rebuild your credit score. The money is secured with a deposit that’s typically refundable when you meet certain requirements, and your credit limit usually equals your upfront deposit.

In terms of the best secured credit cards on the market, the Discover it® Secured Credit Card stands out. With no annual fee and an ongoing cash back rewards structure, it offers more features than other secured cards. Here’s a closer look at the Discover it® Secured Credit Card to help you decide if it’s worth adding to your wallet.

When is the Discover it® Secured Credit Card worth it?

Before taking out a credit card, you want to ensure it’s the right fit for your situation. Here are a few scenarios where the Discover it® Secured Credit Card is worth it:

You want to improve your credit score

No credit score is required when you apply for the Discover it® Secured Credit Card. That makes the card a good option for borrowers with minimal credit history or anyone looking to improve their credit score. Discover reports your payment history to the three major credit bureaus — Experian, Equifax and TransUnion — which will reflect positively on your credit report if you practice responsible credit card usage such as paying on time each month and keeping your balance low.

Keep in mind, however, Discover also reports payment delinquencies, which will hurt your credit score, so make sure you stay on top of your payments.

You don’t want to pay an annual fee

The Discover it® Secured Credit Card doesn’t come with an annual fee, but you will have to pay an upfront security deposit of $200 to $2,500 to “secure” the card. The amount you deposit will equal your initial credit limit, so you’ll have to put down more money if you want a higher credit limit. Discover automatically reviews your account after seven months of responsible use to see if you can transition to an unsecured credit card. If this happens, Discover will return your deposit.

You’re looking for cash back rewards

Unlike most secured credit cards, the Discover it® Secured Credit Card comes with an ongoing cash back rewards structure. You’ll earn:

• 2 percent cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter (then 1 percent back)
• 1 percent back on all other purchases

Even better, Discover offers a unique welcome bonus to new cardholders in the form of its Cashback Match program: At the end of your first year of card ownership, Discover matches all your cash back earnings. That means if you earn $100 in cash back for the year, the issuer will award you an additional $100.

You want to eventually convert it to an unsecured card

After you’ve been a cardholder for seven months, Discover automatically reviews your account monthly to see if you’re ready to graduate to an unsecured credit card. If you do graduate, you’ll get to keep your same account, avoiding another hard credit inquiry to your credit report.

When is the Discover it® Secured Credit Card not worth it?

The Discover it® Secured Credit Card is a good choice for many no- or low-credit borrowers, but it won’t be right for everyone. Here are a few situations where the card may not be worth it:

You already have good credit

If you already have a good credit score, the Discover it® Secured Credit Card isn’t worth applying for. The card comes with a higher-than-average 28.24 percent ongoing variable APR, and you can get a higher credit limit and better rewards by choosing another option, such as the Discover it® Cash Back.

You regularly pay your bills late

If you can’t manage to make your monthly payments on time, a secured credit card is not going to help you. Because Discover reports your payments to the credit bureaus, late payments could further drag down your score. If you still decide that a secured credit card is right for you, consider using autopay to help stay on top of future bills.

You can’t afford the minimum deposit

When you open the Discover it® Secured Credit Card, your credit limit equals your initial deposit. The minimum amount you can deposit is $200, which could be a financial burden.

If you can’t afford the upfront deposit, look into another card that requires a lesser security deposit. For example, the Capital One Platinum Secured Credit Card offers a $200 initial line of credit for a $49, $99 or $200 deposit depending on your creditworthiness.

You don’t have a bank account

You must fund your Discover it® Secured Credit Card with a bank account, so it isn’t an option for borrowers without banking access. If you don’t have a bank account, you may be better off looking into cards that allow alternative payment methods — though watch for even higher fees.

If this is a challenge you’re facing, see our guide to getting a secured credit card with no bank account.

Should you get the Discover it® Secured Credit Card?

If you’re looking for an opportunity to build or rebuild your credit score, the Discover it® Secured Credit Card can help you do just that — and while earning cash back rewards to boot. Just make sure you can afford the upfront deposit and commit to making your monthly payments on time.

The bottom line

The Discover it® Secured Credit Card can help you build credit while also earning a modest amount of cash back — just remember to focus on responsible credit usage over racking up rewards. You’ll also need a minimum security deposit of $200 in order to get the card.

If you’re not sure whether this is the right card for you, check out our list of the best secured credit cards to compare your options. But before you choose a secured credit card, make sure you fully consider the fees, security deposit requirements, upgrade options and any other perks that come with that card.