Episode 3: Dave Discovers a Credit Card Offer He Qualifies For It’s been a few weeks since my last Life, Liberty and the Pursuit of credit journey post. Lots of exciting things have happened since my last update, and although not much has changed, one thing does stand out: After more research, careful consideration, and another slight hiccup, I am now the proud owner of a shiny new (secured) credit card! I spent the last few weeks of my credit journey ensuring I was in the best possible position to improve my credit, and it has paid off – I saw my credit score rise by 40 points since I first attempted to apply for the Aeromexico Visa Secured Card. When I last left you, dear reader, I was excited to apply for BB&T Bank’s Spectrum Cash Rewards Secured Card. I originally had my heart set on a secured card that offers travel rewards, but based on what I read about the secured card offerings from BB&T, I opted for the cash back card – it has a lower annual fee than BB&T’s travel secured card ($19 for the cash back card, $89 for the travel card) – and I can earn better travel rewards once I’ve upgraded my credit file and can qualify for other credit card offers.
Do Your Due Diligence When Applying for Credit Cards – It Pays Off
In Episode 2 of my credit journey to credit card salvation, I mentioned that I liked that the application could not be done online, primarily due to the website issues I experienced when attempting to apply for U.S. Bank’s Aeromexico Visa® Secured Card. I decided to call BB&T before walking over (there is a branch located approximately half a mile away from where I live, and it was a beautiful day in sunny Florida), and I’m glad that I did. I initially reached out to the local BB&T branch because I wanted to ensure that I would have any and all materials I might need for the application in hand before I walked in. The Aeromexico card required a cashier’s check, so I called BB&T’s customer service number (1-800-226-5228) and followed the prompts to speak to a representative, who informed me that each branch has different requirements for credit card applications and that I could get more information by visiting the branch I referenced just before. I called them before I went in and went through my list of questions with a banker who was extremely helpful. I learned that applying for a credit card through a banking institution at which I don’t have an open checking or savings account would be difficult; essentially, in order to be considered for this lucrative secured credit card from BB&T, I’d need to have an active account with them; the rep I spoke with offered to help me open an account, at which time we could investigate my eligibility for the secured card offer I was interested in. This did not appeal to me for several reasons:
- I’d need to transfer money, and wait for it to clear and be posted to the new account, before I could apply for their secured card offer. While this isn’t the end of the world – I’m a patient guy – I felt I’d waited long enough already, and was itching to start rebuilding my credit.
- Even after opening an account with BB&T, there is no guarantee I would qualify for the secured credit card.
- I did not want to open another checking or savings account for the sole purpose of qualifying for a secured credit card; normally, I’d say that opening a new account with the card issuer is a good strategy – however, in this case the juice just isn’t worth the squeeze, as it were. I’d prefer to go that route for a standard rewards card with a much more lucrative rewards program structure, rather than for a secured card.
The BB&T Spectrum Cash Rewards Secured Credit Card is a wonderful credit card offer, but unfortunately, it’s beyond my grasp since I’m not already a BB&T customer. I decided to revisit my options and took a closer look at some of the other cash back secured credit cards currently available. In this chapter of Life, Liberty and the Pursuit of Credit, I discover how easy it is to apply for what would eventually be my next card: A Discover® card.
Pre-approval with Discover® Can Be as Quick as 60 Seconds
During the course of my research, I visited the Discover® website and perused their card offers. While I was there, I decided to use their online tool to see if I qualified for pre-approval, and if so, which cards I was pre-approved for so I could make an informed decision both when writing this blog and also when it came time to apply for a card. Typically, this credit journey process will require you to provide personal details that include:
- First and last name
- Street address
- Approximate annual gross income
- Student status (are you enrolled in school?)
- How much money you pay in rent or mortgage each month
- Housing status (do you rent, or own?)
- Date of Birth
- Social Security Number (SSN)
I filled out the information requested of me on the Discover site and within 60 seconds of submitting my information, I had an answer. I did indeed qualify for the Discover it® Secured Card! Breathing a sigh of relief, I shelved that knowledge for later, happy that at the very least, I had a backup plan in place.
Pre-approval online through a website like Discover’s is fast, safe, and convenient. There is also no impact to your credit score, since Discover does not make a hard inquiry to your account until you actually apply for the credit card(s) you qualify for. Best of all, you don’t even need to leave the house!
What’s so Great About the Discover it® Secured Card?
The Discover it Secured Card is Discover’s solution for applicants on a credit journey whose credit might not be up to scratch when applying for other cards. In my case, I knew that this would likely be the best offer available to me; anyone who completes the pre-qualification process described above may be pleasantly surprised to see that they qualify for other card offers in addition to the secured card that I qualified for. The Discover it Secured Card is a powerful tool for someone like me, since it allows me the added luxury of earning cash back rewards while I rebuild my credit score. Here are some of the main reasons why I recommend it for anyone who wants to rebuild their credit:
- Spending money can be rewarding, even if your credit is considered “poor.” Using this card, you can earn 2% cash back – up to $1,000 in purchases each quarter – from purchases made at gas stations and restaurants. Since I commute to work, and my girlfriend and I are foodies and love to try new food spots, this perk stood out to me. Granted, the cash back is capped once you’ve spent $1,000 in a given quarter, but that’s just for the 2% rate.
- For all other purchases, you’ll get unlimited 1% cash back. Automatically. That unlimited rate also applies to gas and grocery purchases once you’ve reached the spending limit for the 2% perk!
- Perhaps best of all, Discover® will match all of the cash back you’ve earned at the end of your first year of account use, automatically. Yes, you read that correctly. After the first twelve consecutive billing periods that your account is open, Discover will match all of the cash back rewards you’ve earned, which will be applied as a statement credit in the following one or two billing periods. Note that your account must still be open and in good standing at the time you’d receive this bonus, otherwise you’ll forfeit the cashback match on your credit journey.
- There is no annual fee for this card, which makes saving money while improving your credit much easier.
- A competitive, standard purchase APR applies to your spending with this card. I recommend paying off your entire balance each billing cycle, which is why I chose a relatively low credit limit when I submitted my application, so that I don’t overshoot and end up needing to carry my balance to the next billing period only to have the APR apply to my total balance.
- The security deposit you submit with your application is fully refundable.
- After 8 months, Discover will begin to automatically review your account. If you’ve demonstrated financial responsibility and your credit has improved, you may automatically be moved into an unsecured card, at which time your deposit will be refunded to you. Financial responsibility applies not only to your use of this secured card; you will need to monitor all of your loans and other credit cards in order to ensure that you are in the best possible position for good credit.
My Credit Journey: Applying for the Discover it® Secured Card
When you’re ready to submit your application for any Discover card, you’re able to do so on their website from the comfort of your home. You’ll provide all the same information you provided for the pre-approval check: Full name, street address, primary phone number, employment status, Social Security Number, etc. In order to complete the application, you’ll also need to provide your bank routing number and your bank account number. This is required for two reasons:
- In order to open your account, you need to provide a minimum security deposit of $200. The amount you deposit will determine your credit limit.This deposit is refundable, and Discover will communicate with your bank to pull it from the account you provide, so before applying it’s a good idea to double check the funds that are in your checking or savings account to ensure that you don’t cause an overdraft.
- It is an added measure for Discover to verify that you are in fact who you say you are and are not a fraudster or credit creeper.
You’ll also notice that you can customize your credit card design – there are a total of five card designs to choose from to give your new credit card a bit of personality. I opted for a sleek, charcoal grey design.
One of the coolest features about this card is that the front does not display your name or any other information. Traditionally, credit cards are embossed and display raised letters and numbers on the front of the card; this is because when credit cards first gained popularity, in order to scan the information on them, merchants needed to use an imprinter – better known colloquially as a “click clack machine” or a “knuckle buster” – in order to make a carbon copy print of a customer’s credit card. Embossed cards can be bulky – they take up room in your wallet, and Discover’s design makes it easier to keep the card in a wallet or money clip by displaying your name and card number on the back.
Once you’ve filled out all required information fields, you can submit your application online; turnaround for me took less than two minutes, and I was directed to a screen that told me I was approved for the card immediately. Discover stipulates that they will send your new card out within 10 business days; I received my new card within five total business days. Card activation, as well as mobile and online setup, was quick and easy. There’s a sticker on your card that directs you to either call a toll-free number or visit a website to activate your card. I chose to do so via the website and was able to activate it within two minutes by providing my first and last name, the card number, security code, and some personal identifying information. I was then prompted to download the app, which I did, and I then set up my mobile account – which also serves as my login for my online account. Using the app, or the online account, makes paying down my statement convenient. I can use the app to check my balance, see how much credit I have left, view my free FICO® score, report a fraudulent charge, and even freeze my card account. Of course, these are all achievable by calling Discover’s customer service number on the back of my card, but the app makes it that much more convenient and eliminates the need to wait for a representative to be available – or actually speak to someone. You can use the app for many things – once you’ve earned cash back rewards you can even redeem them through the app portal.
All in all, the Discover® experience has been a positive one on my credit journey. To celebrate my credit card approval (and to show off my sexy new card), I treated my girlfriend to dinner and started earning 2% cash back rewards right off the bat. I’ll need to pay close attention to my balance over the next few months of my credit journey to ensure I don’t surpass my credit limit, and to make sure I make all of my payments in full and on time. As with any credit card, planning is required when making purchases, and I’m aiming to demonstrate financial responsibility so that I can be approved for a non-secured account and refund the deposit I made to open my secured credit line. Discover says that they begin to evaluate creditworthiness after 8 months of card use, so I may not see any new offers until June of next year. Until then, I’ll be using this card for all gas and dining purchases I make, and I’m excited to see how much cash back I can earn.