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People with bad credit have a new option for getting credit cards: the Discover it Secured credit card. By entering the secured-card market (this is the only secured card the issuer offers), Discover becomes more accessible to consumers with a variety of credit histories. Discover opened up the secured-card application to all consumers on Jan. 25 (previously it was only offered to select online applicants).
Secured credit cards can be helpful for people trying to fix their credit or establish a credit history for the first time. And issuers negate some of the risk of doing business with such consumers by requiring a deposit to open the account. That deposit serves as the cardholder’s credit line, and beyond that, the card works like most other credit cards: You make purchases, and every billing cycle, you make a payment. If you don’t make your payment, however, the issuer can take your deposit.
The Discover it Secured Card offers credit limits of $200 to $2,500, based on the applicant’s creditworthiness, according to a news release on the new card. (Keep in mind deposits are equal to credit limits, so you’ll need $200 to $2,500 upfront to open the account.) The card has no annual fee, cash-back rewards, a cash-back bonus and a free FICO credit score on monthly statements and online. The standard purchase APR is a 23.24% variable rate.
The news release also notes that your card activity will be reported to the three major credit reporting agencies (Equifax, Experian and TransUnion), and there’s the potential to “graduate” to an unsecured line of credit after a year of using the secured card responsibly.
Discover didn’t specify what that responsible behavior looks like, but generally, a responsible credit card user pays their credit card bills on time and uses a small portion of their available credit. Those two practices can help you improve your credit scores, too, which can be very helpful for those just starting out or people needing to repair their credit. You can see how your credit card use affects your credit by getting two free credit scores every 30 days on Credit.com.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.
More on Credit Cards:
- Credit.com’s Expert Credit Card Shopping Tips
- How to Get a Credit Card With Bad Credit
- An Expert Guide to Credit Cards With Rewards