Credit Cards

How To Add Money To Discover Credit Card

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 7 minute read

When compared to other secured credit cards, the Discover it® Secured Credit Card has a rather significant cash back rewards program and no annual fee. Spending at gas stations and restaurants nets a 2% cash back bonus, up to $1,000 every quarter, while all other purchases receive 1% cash back, with no cap. 

Those are the same cash back rewards terms as the popular unsecured credit card Discover it Chrome, also known as the “Discover Gas and Restaurants Card” (which makes sense) in some circles.

Despite its robust rewards program, the Discover it Secured Credit Card is aimed at helping customers with less-than-perfect credit histories get back on their feet and reestablish their financial footing. 

After a year of responsible use and on-time payments, Discover will record your positive payment history and credit utilization to all three major credit agencies and you’ll be eligible for a regular, unsecured Discover credit card. Consider the Discover it Secured Credit Card if you need a means of establishing or improving your credit.

Key Characteristics

Deposit Requirement and Cancellation Policy

The minimum security deposit on the Discover it Secured Credit Card is $200, with no cap on the amount that can be deposited. If Discover determines that your creditworthiness and income are sufficient, your deposit amount will always be equivalent to your credit limit. We cannot offer you any interest on your deposit.

After 7 billing cycles, Discover will automatically evaluate your account each month to see if you’ve met the criteria for an upgrade to an unsecured Discover credit card like Discover it or Discover it Chrome. If you are upgraded and your Discover deposit is refunded, it will happen within two months.

Limits and Increases in Credit

Submit an official request for an increase in your credit limit if you’d like to do so. A new security deposit in the amount of the increase will be required if your application is accepted. A maximum of $2,500 is set as your credit limit.

Cash Back Rewards Earning

Up to $1,000 in combined quarterly spending on restaurants and gas stations will earn 2% cash back with this card. Over and beyond the $1,000 limit, you’ll get 1% cash back on any other transactions, including those made at restaurants and gas stations.

Cash Back Reward Redeeming

You can use your collected cash back for purchases from participating online merchants or get a credit on your account statement. You can get gift cards from Discover or other retailers in $20 increments. You will lose any cash back you have accrued with Discover if your account is inactive for 18 months.

Double Cash Back Your First Year

Instead of a standard sign-up bonus, the Discover it Secured Credit Card doubles your cash back for the first 12 payment cycles. Even if you just spend $5,000 on your card in your first year, you’ll wind up with $100 in cash back incentives. Cashback Match is a great incentive for new cardholders.

Reporting to Credit Bureaus

Discover will inform all three main credit bureaus of your payment history including any missed payments every billing cycle. Accountability in credit use and bill payment is rewarded with consistent reporting. If you maintain those requirements, your credit score will improve over time.

FICO Score for Free

A free FICO credit score is included with every monthly bill to help you monitor your credit history and track any positive changes that may have occurred since your last statement. With a Discover.com account, you get 24/7 access to your FICO score.

Freeze It

With Discover’s Freeze It feature, you can temporarily halt your card’s ability to be used for purchases, cash advances, and balance transfers. 

When you activate Freeze It, your regularly scheduled transactions, payments, interest, account fees, and other debits will proceed as planned. If you lose your card or have any reason to believe it may be subject to fraudulent usage, this function will come in handy.

Intro APR

Make sure to transfer your balance within the first three months of creating your account to avoid the high-interest rate of 10.99% APR that will be applied after the first six months have passed from the transfer date. Unfortunately, there is no discount on the annual percentage rate for purchases.

Regular APR

After the initial promotional period ends, the APR for balance transfers will increase to 24.49%. From the date of account opening, the purchase APR is 24.49 percent. The annual percentage rate for a cash advance is 26.49%.

Significant Fees

Neither an annual charge nor a fee for making overseas transactions is imposed. There is no minimum required for the balance transfer fee, which is 3% of the transferred amount. The cash advance fee is $37, the late payment fee is $37, and the returned payment fee is $37.

Credit Required

People with less-than-perfect credit should apply for this card. The only mark on your credit report that can hurt your application is a recent bankruptcy.

Pros

  1. There is no annual fee. There is no yearly charge for the Discover it Secured Credit Card. Good news for those who like to make the most of their cash back benefits (especially when the card is secured).
  2. A Reward System That Gives You Money, And Gives You Options. When compared to other secured credit cards, Discover it Secured Credit Card’s cash back rewards scheme holds its own. Spending at restaurants and gas stations both receive 2% cash back, up to a quarterly maximum of $1,000 spent in any area. Over and beyond the quarterly maximum of $1,000, you’ll get an unlimited 1% cash back on any other purchases, including those at restaurants and gas stations. You can cash out your rewards at any moment and in any sum, regardless of how much or how little you’ve earned. BankAmericard Secured Credit Card is among the many secured cards that don’t offer any form of cashback benefits.
  3. The initial year’s cash-back bonus was double the amount. Cashback Match is a potentially effective introductory feature that can multiply the initial expenditures of new Discover it Secured cardholders. For the first year as a cardholder, every cash back you earn is doubled, no matter how much you spend or earn. The rewards you receive from using this card are doubled for the first year, which is an exceptional introductory offer compared to other secured credit cards.
  4. After 7 months, we’ll review your account each month. After seven months of account maintenance, Discover will assess your account for an upgrade in the seventh month. You may be eligible for an upgrade to an unsecured credit card if you have a good payment history with this card and other forms of credit such as auto and mortgage loans. If you get a promotion like that, your security deposit is completely refundable.
  5. Welcome, Offer. Transfer Your Balance for a Discount if You’re a New Cardmember. With few exceptions, this is one of the only secured credit cards that provides a promotional introductory APR period. For the first six months after account opening, new cardholders will be charged just 10.99% APR on balance transfers done before August 10, 2017. If you’re carrying high-interest credit card debt and would like to get rid of it, but you don’t think you’ll be approved for a more advantageous balance transfer credit card, this promotion may be worth your while.
  6. There will be no additional fees for making a foreign exchange. There is no additional charge for using this card in a foreign country. That’s a nice bonus for cardholders who take journeys across international borders, even if they’re just across the border for a few hours. And among low-end credit cards that don’t provide their own travel rewards program, this is rather unique.
  7. There will not be a penalty rate of interest. Explore it and you’ll find The interest rate on Secured does not include any penalties. There will be no increase in your rate if you miss a payment due date due to lack of funds or forgetfulness. When compared to the Citi Secured Mastercard, for example, many other secured credit cards offer penalty interest rates nearing 30% APR.

Cons

  1. Credit Line is Fairly Limited. Learn to Identify It The maximum amount you can borrow with Secured is $2,000. Many secured credit cards in the market have limits of $5,000 or more, much above the average of $3,000. This restriction may be problematic if the automobile is used as the principal method of spending for a family with a sizable budget.
  2. Initial Deposit Requirements Are Fairly High. Your initial deposit must be at least $200 when opening an account. It can be difficult to come up with $200 quickly if you are living paycheck to paycheck or have an extremely tight household budget. The required deposit for Capital One Secured Mastercard is $49, which is significantly lower than the requirements for several rival cards.
  3. No Interest Will Be Paid on Your Deposit. Learn to Identify It Funds deposited on a Secured Credit Card earn no interest. In spite of the fact that the returns on most secured credit cards aren’t particularly impressive, even $5 or $10 a year can make a difference to cardholders who are watching their spending closely.

Bottom Line

It’s safe to say that the majority of secured credit cards lack any semblance of frills. Rebuilding credit and getting back on one’s feet financially are the primary goals of these cards, not lavish benefits like cash back or free flights.

In comparison, the Discover it Secured Credit Card offers certain unique features. Its cash-back program isn’t the best, but it’s not terrible, either, especially compared to other types of credit cards that don’t require a security deposit. One might do worse than this card if one were looking for a rewards program while attempting to repair credit.

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