Discover it Secured Review: Earn Rewards as You Build Credit

The Discover it® Secured Credit Card is the world-class sidekick you want when you lack a credit history or have bad credit. As a secured card, it far exceeds credit builders’ expectations in more ways than one.

Unlike most of its competitors, this card tells you when you might be able to graduate to a regular card and get your deposit back. Starting at seven months, Discover will review your account to determine whether you’re eligible for an upgrade. The card also features rewards — which are not generally offered on secured credit cards — and an annual fee of $0. It requires a security deposit of at least $200, but you can get that money back when you upgrade to a regular credit card or close the account in good standing.

» MORE: Explore the best credit cards with no credit check

Discover it® Secured Credit Card: Basics

Card type: Secured.

Annual fee: $0.

Security deposit: A minimum of $200. This amount determines your credit limit. Deposits can be as high as $2,500.

Bonus: INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.

Rewards: Earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. All other purchases earn 1%.

APR: 10.99% intro APR on Balance Transfers for 6 months, and then the ongoing APR of 27.99% Variable APR.

Foreign transaction fee: None.

Other perks:

• Payments are reported to the three major credit bureaus (TransUnion, Equifax and Experian), which helps you build credit.

• Discover reviews your account starting at seven months to see if you qualify for a regular credit card.

• Discover doesn't charge a late fee on the first late payment.

• The issuer's Credit Scorecard lets you track your credit score.

• Free Social Security number alerts notify you when your information is found on the dark web.

• An on-and-off switch, called Freeze it, allows you to block new purchases, cash advances or balance transfers from the issuer's online portal or app. This can come in handy if your card goes missing.

» MORE: NerdWallet's best secured credit cards

Why you might want the Discover it® Secured Credit Card

More value in the form of rewards

It’s rare to find a secured credit card that offers rewards. With this card, you’ll earn 2% cash back on up to $1,000 in spending per quarter on gas and restaurant purchases, and an unlimited 1% back on all other purchases. You'll also receive a one-time bonus: INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match. Rewards don’t expire, and there’s no minimum redemption amount. They can be redeemed through direct deposit to a bank account or as a statement credit to your account, among other options.

The chance to upgrade to a regular credit card

After you’ve held the card for seven months, the company will begin automatic monthly reviews to see whether you’re ready to move to an unsecured card and get your deposit returned. When you do transition to a regular card, you’ll keep the same account. Because opening a new account can lower your credit score in some instances, this is great for people who are excited to enter good credit territory.

An annual fee of $0

You're already required to pay a security deposit on a secured card, so it's best to avoid an annual fee, if you can help it. This card's annual fee of $0 is one less obstacle for would-be applicants.

» MORE: Discover credit cards mobile app review

Why you might want a different credit card

The minimum deposit is $200

Although the $200 minimum security deposit on the Discover it® Secured Credit Card is relatively low, it can still be a barrier. In this regard, the Capital One Platinum Secured Credit Card could be a superior card. In some cases, you may be able to qualify for a minimum deposit of just $49 or $99 for a credit limit of $200 on this card.

Without a credit history, you can also consider the Petal® 2 "Cash Back, No Fees" Visa® Credit Card, which has no security deposit requirement. WebBank, Petal's issuing bank, can evaluate creditworthiness with an algorithm that analyzes your income, savings and spending. The card also earns up to 1.5% cash back with consistent on-time payments: It starts you off with 1% cash back on all purchases, but that goes up to 1.25% after six on-time payments and 1.5% after 12 on-time payments. It has an annual fee of $0.

It has a high ongoing APR

The interest on the Discover it® Secured Credit Card is not very attractive: It comes with 10.99% intro APR on Balance Transfers for 6 months, and then the ongoing APR of 27.99% Variable APR. If you plan to carry a balance, you may be better off with the $0-annual-fee DCU Visa® Platinum Secured Credit Card, which has a much better APR. The ongoing APR is 16.25% Variable — which is even lower than the rates on many unsecured cards. You'll need to qualify for membership at that credit union to be eligible for the card.

It requires a bank account

Because the security deposit for the Discover it® Secured Credit Card has to be funded by a bank account, this card is not a viable solution for some people. Unbanked consumers may be better off with the OpenSky® Secured Visa® Credit Card, which offers alternative funding options, even though that card has an annual fee of $35.

Learn about all your options by reading NerdWallet's roundup of the best credit cards.

Is the Discover it® Secured Credit Card right for you?

If you’re committed to building or rebuilding credit, a secured card can be very helpful, especially a card like this one that has a smooth process to help you transition to an unsecured card when you’re ready. This card also gets high marks for paying such generous rewards and having an annual fee of $0.