Key takeaways
- The Discover it® Secured Credit Card and the Self – Credit Builder Account with Secured Visa® Credit Card can both help you build or fix your credit.
- The Discover it® Secured Credit Card comes with no annual fee and earns ongoing rewards, although a traditional upfront security deposit is required.
- The Self Visa includes both a credit card and an installment loan, offering a health mix of different types of credit.
- The right card for you depends, among other factors, on how quickly you want to build credit and your access to the cash needed for a security deposit.
These days, everyone is interested in your credit: landlords, potential employers, insurers and even cable and telephone companies. So what do you do if you’re just starting your credit journey or have made an unfortunate mistake that negatively impacted your score?
Whatever your situation, there are many solutions available to help you build and fix your credit. For example, the Self – Credit Builder Account with Secured Visa® Credit Card and the Discover it® Secured Credit Card are two secured credit cards that can help you improve your credit score.
However, these cards are very different in the way they work. To begin with, the Discover it® Secured Credit Card doesn’t have an annual fee. On the other hand, using the Self Visa (which is a bit more than just a card) will cost you, especially in the long run. Depending on your personal circumstances, however, this can be money well spent.
Before we dive in, keep in mind that both the Self Visa and Discover it® Secured Credit Card have sky-high interest rates — the Self Visa has a 28.74 percent variable APR and the Discover it® Secured Credit Card has a 28.24 percent variable APR. So if you expect to carry a balance from month to month, you should try to find a cheaper solution.
Main details
| Cards | Self – Credit Builder Account with Secured Visa® Credit Card | Discover it® Secured Credit Card |
|---|---|---|
| Welcome bonus | N/A | 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 rate | N/A |
|
| Intro APR | N/A | 10.99% intro APR for 6 months on balance transfers, then a variable APR of 28.24% (3% introductory balance transfer fee applies; up to 5% fee on future balance transfers) |
| Annual fee | $25 | $0 |
| Foreign transaction fee | N/A | None |
Self Visa vs. Discover it Secured highlights
Welcome bonus winner
-
The Self Visa doesn’t include a welcome offer, so the Discover it® Secured Credit Card wins in this category. While it’s not an upfront bonus, Discover will match all of the cash back you earn at the end of your first year. For example, if you earn $100 in the first 12 months of card membership, you’ll get another $100 back from Discover at the end of the year for a total of $200 in cash back.
Rewards rate winner
-
The Discover it® Secured Credit Card offers 2 percent cash back at gas stations and restaurants (on up to $1,000 in combined purchases per quarter, then 1 percent back) and 1 percent back on other purchases. In comparison, the Self Visa doesn’t offer a cash back program.
-
The Discover it® Secured Credit Card has no annual fee while the Self Visa has a $25 annual fee.
Foreign transaction fee winner
-
Technically speaking, neither card charges a foreign transaction fee, but the Self Visa can’t be used outside of the U.S. anyway. Since the Discover it® Secured Credit Card can be used overseas, it wins in this category. However, note that Discover’s acceptance outside of the U.S. can be more limited than Visa or Mastercard, depending on where you’re traveling.
Which card earns the most?
The Discover it® Secured Credit Card has a cash back program while the Self Visa doesn’t, so the Discover option will inevitably earn more. Let’s take a look at an example of how much it could earn.
Self Visa vs. Discover it Secured spending example
Maximizing your 2 percent cash back at gas stations and restaurants each quarter is not that hard — especially when you consider the price of gas and that takeout and food delivery also qualify. So if you can make $1,000 in combined purchases each quarter across these two categories, you’ll pocket $80 a year in cash back. Discover will match all the cash back new cardholders earn at the end of the first year, so just maxing out the gas and restaurant earning is effectively worth $160 in cash back in your first year.
But keep in mind that the unlimited 1 percent cash back you’ll earn on all of your other purchases will also be matched. So, you’ll effectively be earning 2 percent cash back on all non-bonus purchases for the first year.
If you spend $1,000 a month on 1 percent categories, you’ll earn $120 in cash back over the course of a year. Discover will match that for a total of $240 at the end of the first year. Then, add the $160 in cash back you’ll earn for maximizing your 2 percent bonus categories, and you’ll end up with a grand total of $400 cash back earned at the end of the first year.
Why should you get the Self Visa?
The main appeal of the Self Visa is that it combines an installment loan with a revolving credit card account and reports your progress to all three major credit bureaus: Equifax, Experian and TransUnion. Although it is a minor factor, a healthy mix of an installment loan and a revolving account can help you boost your credit score. So if you need all the help you can get to increase your credit score a little faster, the Self Visa can be invaluable and well worth the extra fees.
As importantly, if you’re strapped for cash, the Self Visa doesn’t require a traditional cash security deposit to get started. This fact alone could make the card worth it for you. In order to qualify for the card, however, it is important to remember that you’ll first need to sign up for a Self Credit Builder Account, make three on-time monthly payments and have at least $100 saved in your account (which effectively serves as your security deposit).
-
Self Visa’s certificate of deposit* (CD) earns interest
Each on-time payment you make to your Credit Builder Account also helps build your savings. Self stores this savings in a CD which earns interest. While this is hardly a wow factor — especially since Self charges interest for your credit builder loan (which, unlike credit card interest, you can’t avoid) — earning something is better than earning nothing.
-
The Self Visa offers only basic Visa benefits — which include lost or stolen card reporting, a cardholder inquiry service, emergency card replacement and cash disbursement, zero liability for unauthorized purchases, access to Dovly Uplift, pay-per-use roadside dispatch and ID Navigator Powered by NortonLifeLock.
-
Since the Self Visa doesn’t have a rewards program, there are no redemption options.
-
No credit history is required to apply for the Self Visa.
Why should you get the Discover it Secured?
As mentioned, credit mix is only a minor factor in the credit score formulas. So if you’re in no particular hurry, using the Discover it® Secured Credit Card will save you quite a bit of money compared to the Self Visa. You’ll also earn cash back on all purchases. Additionally, you might qualify for an unsecured card with Discover after seven months of on-time payments. In that case, your cash deposit will be returned.
-
Additional Discover it Secured benefits include free access to your FICO credit score and late payment forgiveness on your first late payment (then up to $41). Discover will also monitor your Experian credit report and alert you about any changes. Plus, it will monitor thousands of Dark Web sites and let you know if it finds your Social Security number. Every 90 days, Discover will also scan 10 select people search sites for your personal information and submit opt-out requests on your behalf.
-
The easiest way to redeem cash back is to apply it toward your credit card bill as a statement credit. You can also deposit your cash to your banking account, use it on Amazon or with PayPal, redeem it for gift cards or make a charitable donation. Whatever you do, know that your Discover cash back benefits never expire as long as your account stays open.
-
No credit history is required to apply for the Discover it® Secured Credit Card.
The bottom line
While the Self Credit Builder Account with Secured Visa and the Discover it® Secured Credit Card can both serve as excellent tools for consumers trying to build or rebuild their credit, the Discover it® Secured Credit Card has three major advantages over its competitor: it doesn’t charge an annual fee, it has a solid cash back program and it offers valuable protective benefits. That said, the Self Visa can give you an edge if you need to speed things up since it offers two products in one — an installment loan and a revolving credit card account. That healthy mix of accounts can play a role in boosting your score.
In other words, if you’re in no particular hurry and you don’t mind depositing at least $200 as collateral, take a closer look at the Discover it® Secured Credit Card. If your priority is to get as much help as you can to speed up your credit recovery, look into the Self Visa.
However, keep in mind that every credit consumer and their circumstances are different. No one can say for certain that one product will help you more than another. Of course, there are more credit-building cards available to consider, so make sure to take a look at other top secured cards or cards for bad credit before making your decision.
Read the full article here
