A secured credit card like the Discover it secured card can be a great way for someone with little or no credit history to start building credit. With a secured card, the credit limit is usually equal to the security deposit that the cardholder provides upfront. This deposit helps lower the risk for the card issuer, making it possible for someone with poor or no credit to qualify.
One of the first things someone interested in a secured card will want to know is how much they’ll need to put down as a deposit to open the account. This deposit amount essentially becomes the credit limit on the card. Each secured card has a minimum deposit required to open the account. So what is the minimum deposit for a Discover it secured credit card?
What is the Discover it Secured Card?
Before getting into the specifics on the minimum deposit, let’s first make sure we understand what the Discover it Secured Card is. As the name implies, this is a secured credit card issued by Discover. It provides cardholders with the opportunity to build credit with Discover, which is one of the major credit card networks in the United States.
Some key features of the Discover it Secured Card include:
- Credit limits between $200 and $2,500.
- 2% cash back rewards on up to $1,000 in quarterly spend at gas stations and restaurants.
- Unlimited 1% cash back on all other purchases.
- 100% U.S.-based customer service available 24/7.
- Free access to your FICO® Credit Score.
- No annual fee.
The Discover it Secured card provides the same rewards structure and benefits as the unsecured Discover it Cash Back card. The only difference, other than needing a security deposit for approval, is the secured card has a lower maximum credit limit.
What is the Minimum Deposit for the Discover it Secured Card?
The minimum security deposit required to open a Discover it Secured Card account is $200. So if you are approved for the card, Discover requires a minimum deposit of $200. The maximum deposit is $2,500.
So your credit limit on the secured Discover card will be at least $200 and can be up to $2,500, depending on the deposit you provide.
If your credit limit on the card is $200, you will need to provide a $200 refundable security deposit. If your credit limit is $500, you supply a $500 deposit, and so on. Whatever the credit limit is equals the deposit amount you’ll have to put down.
How the Deposit Works
When you open a Discover it Secured Card account, you won’t actually have to provide a cash deposit upfront. Instead, Discover will place an authorization hold on your checking or savings account for the deposit amount when they approve your application.
For example, if you are approved for a $500 credit limit, Discover will place a $500 authorization hold on the bank account you provided. This hold means the funds will be unavailable for other purposes while securing your Discover credit card.
Your monthly card payments will be due as usual. Discover will periodically review your account, and if you responsibly make on-time payments, they may refund the security deposit and graduate the account to an unsecured card. Otherwise, the deposit is there to cover you if you default on the account.
You have the option to provide the deposit amount upfront if you prefer. But the authorization hold makes it easier to open the account if you don’t have the full deposit readily available.
Qualifying for the Minimum $200 Deposit
While Discover allows secured credit limits as low as $200, approval for even the minimum credit line is not guaranteed. Discover will review factors like your income, existing credit accounts, and banking history when making a decision.
Having an income of at least $2,000 per month improves your chances of qualifying for a $200 credit limit on the secured Discover card. But keep in mind, many card issuers are tightening standards in the current economic environment, so it can be challenging to get approved without a credit score.
If you already have an open credit card in good standing, even with a small limit, applying for the Discover secured card likely won’t make sense. At that point, you may be better off requesting a credit line increase on your existing card.
However, if you need to establish credit for the first time and meet the requirements, the $200 secured Discover card can be a great fit as your first credit account.
Should You Start with a $200 Limit?
While $200 is the minimum deposit required, is that the best amount to start with? Generally, a higher credit limit and deposit will help build your score faster. But you also want to make sure you start with a limit you’re comfortable with.
A $200 limit on your first credit card can be manageable. It shows you can handle at least a small line of credit responsibly. You can then ramp up by requesting increases over time or applying for an additional card.
However, the deposit ties up your available funds for other uses. So if you can comfortably afford a higher deposit of $500 or $1,000 to start, your credit may build more quickly.
Just keep in mind that requesting too high of a limit to start can backfire. Try to strike a balance with your first card deposit between what you can afford and the minimum spending and payment levels you can reliably meet each month.
Tips for Getting Approved
Since the Discover it Secured Card does require a credit check, here are some tips that can help with getting approved:
– Have at least $2,000 in monthly income from a job, Social Security, or other consistent sources.
– Make sure you have a U.S. bank checking or savings account to link to the card for payments.
– Have a U.S. residential address where you’ve lived for at least two years.
– Don’t submit multiple credit applications in a short period as this can be seen as a sign of financial distress.
– Consider adding your rent, utility bills, or other recurring payments to your credit report to demonstrate responsible usage.
– If declined, wait at least six months before reapplying and work on improving your credit in the meantime.
Meeting these criteria improves your chance of approval for the Discover secured card, even for the minimum $200 deposit and credit limit.
Alternatives to the Discover it Secured Card
The Discover it Secured Card is one of the strongest secured card options available thanks to its cash back rewards program and additional benefits. However, here are a few alternatives to consider if you aren’t able to qualify for a Discover secured card:
Capital One Secured Mastercard
– Minimum deposit is $49, $99 or $200
– No rewards program
– No credit check for approval
– Graduates to unsecured card after making 5 monthly payments on time
OpenSky Secured Visa Card
– Minimum deposit is $200
– No credit check approval
– No rewards program
– No graduation process to unsecured card
Chime Secured Credit Builder Visa
– Minimum deposit is $200
– Requires linking Chime Checking account
– Small cash back rewards program
– No credit check or graduation process
These options from Capital One, OpenSky, and Chime may approve applicants that don’t have established credit. The key trade-off is most don’t offer rewards or have a clear graduate program. But they can help build credit through on-time payments.
Start Building Credit with Discover
Overall, the Discover it Secured Card provides one of the best combinations of benefits for establishing your credit profile for the first time. Just keep in mind it requires a minimum security deposit of $200 to get started. And approvals aren’t guaranteed without an existing credit history.
But by managing even a small $200 credit line responsibly with on-time payments, you can begin building your credit score. And Discover may increase your limit or graduate you to unsecured credit in as little as 7 months.
If you have limited credit history, the Discover it Secured Card should be strongly considered as the first step to establishing your financial profile. Just make sure you only request a deposit and initial spending amount you can comfortably manage based on your income and expenses. Start small but demonstrate consistent responsible usage and payment history.
Frequently Asked Questions
Does a Discover secured card require a credit check?
Yes, the Discover it Secured Card does require a credit check as part of the application process. They need to verify your identity and will assess factors like your income, any open accounts, and banking history.
Can you get denied for a Discover secured card?
It is possible to get denied for a Discover it Secured Card, even though it is designed for people with poor or no credit history. Reasons for denial can include limited income, no U.S. bank accounts, or having an already established unsecured card.
How long does it take to get the deposit back?
Discover will periodically review your account for potential graduation to an unsecured card in as little as 7 months. If you don’t graduate by month 20, you can contact Discover and request that your security deposit be refunded.
Does Discover do a hard pull for secured cards?
Yes, Discover will perform a hard credit check when you apply for their secured credit card. This inquiry will show up on your credit report. However, it’s still worthwhile to apply as the benefits outweigh the minor ding from the hard pull.
How can I increase my credit limit on the secured Discover card?
Your credit limit on the Discover secured card is directly tied to your refundable security deposit. To request an increase, you’ll need to contact Discover and provide an additional deposit amount to raise your credit line.
Conclusion
Building credit for the first time can seem daunting. But the Discover it Secured Card provides a way to establish your credit profile, even if you’re starting from scratch. Just be aware that you’ll need to put down a minimum refundable security deposit of $200 to open an account and receive an initial $200 credit line.
While approvals aren’t guaranteed without an existing credit history, meeting Discover’s minimum requirements for income and banking relationships improves your chances. Be patient, start small, and demonstrate responsible account management. Before long you’ll be on your way to qualifying for unsecured credit and accessing the benefits that come with higher credit scores.