Using a credit card responsibly is a great way to build credit over time. The issue? Poor credit or a nonexistent credit history can make it more difficult to be approved for a credit card. One solution is to apply for a secured credit card.

A secured credit card allows you to make small purchases within a credit limit in exchange for a security deposit up front. If you pay your bill on time every month and use the secured card responsibly, you can be well on your way to transitioning to an unsecured card and building better credit. Here’s how it works:

  1. Get Approved and Provide a Security Deposit
  2. Use Your Card Responsibly
  3. Apply to Increase Your Credit Line
  4. Transition to an Unsecured Card
  5. How the Discover it® Secured Credit Card is Different

1. Get Approved and Provide A Security Deposit

Start by applying for the card and providing a security deposit. In the case of the Discover it® Secured Credit Card, your credit line will be created up to the amount we can approve (and getting the card isn’t guaranteed — your application can be turned down). In other words, if your security deposit is $500, your credit limit is also $500.

2. Use Your Card Responsibly

Once you’re approved and receive your card in the mail, it’s important to use your credit card and other loans responsibly. Your secured credit card is a real credit card, not a debit or prepaid card. Using your secured credit card will build a credit history with the three major credit bureaus. If you use your secured card and other loans responsibly, you can build positive credit history. Late payments, delinquencies or other derogatory activity with your credit card accounts and loans may adversely impact your credit. Start by charging small and manageable amounts, and pay every bill on time and in full.

3. Apply to Increase Your Credit Line

If over time you find that you need a higher credit limit, you can apply for a credit line increase and deposit additional money from your bank.

4. Transition to an Unsecured Card

Some secured card issuers will periodically review your account to see if you qualify for an unsecured card. With Discover, after 8 months with your secured credit card, your account will be reviewed monthly to see if you can get your security deposit back and graduate to an unsecured account.[1] Nothing else changes with your Discover card, so your rewards transfer over, too.

5. How the Discover it® Secured Credit Card Is Different

The Discover it® Secured Credit Card is one of the secured cards that offers rewards. The card offers two percent Cashback at restaurants and gas stations on up to $1,000 in combined purchases each quarter.[2] Plus 1 percent cash back on all other credit card purchases. At the end of your first year, Discover will automatically match all the cash back you’ve earned at the end of your first year on your credit card – only for new cardmembers.

Published March 30, 2017

Updated January 11, 2021

[1] Discover refunds deposits two ways: 1) automatic monthly reviews at 8 months to see if your account qualifies to “graduate” after showing responsible use of all your credit over time, or 2) when you close your account and pay in full we will return the security deposit to you. Deposit refunds can take up to two billing cycles plus ten days.

[2] You earn a full 2% Cashback Bonus® on your first $1000 in combined purchases at Gas Stations (stand-alone), and Restaurants each calendar quarter. Calendar quarters are defined as the three-month periods beginning January 1, April 1, July 1, and October 1. Purchases at Gas Stations and Restaurants over the quarterly cap, and all other purchases, earn 1% cash back. Purchases made at Gas Stations include only merchants in the category that sell automotive gasoline that can be paid for either at the pump or inside the station. Gas Stations affiliated with supermarkets and supercenters may not be eligible. Restaurant purchases include only those made at merchants classified as full-service restaurants, cafes, cafeterias and fast food locations. Certain digital wallet transactions qualify for 2% Cashback Bonus, for more information see Discover.com/digitalwallets. Purchases made through third-party payment accounts, mobile or wireless card readers, virtual wallets or similar technology will not be eligible if the technology does not provide sufficient transaction details for rewards qualification. 2% Cashback Categories: In accordance with standard industry practices, merchants are assigned a merchant category code (MCC) typically based on their line of business, or the type of products and/or services they primarily sell or provide. Discover Card does not assign MCCs to merchants. Even if you make purchases at a merchant of items that appear to fit in a rewards category, the merchant may not have an assigned MCC in that rewards category. Only purchases made from merchants located in the United States are eligible for 2% Cashback Bonus. In order for a purchase to qualify for the 2% Cashback Bonus Program, the transaction date must be before or on the last day of the offer or promotion. Rewards are added to your Cashback Bonus account within two billing periods. See Cashback Bonus Program Terms and Conditions for more information about your rewards.

Cashback Match: We’ll match all the cash back rewards you’ve earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer, and add it to your rewards account within two billing periods. You’ve earned cash back rewards only when they’re processed, which may be after the transaction date. We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This promotional offer may not be available in the future and is exclusively for new cardmembers. No purchase minimums.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.