Transcription
Hello, good morning. How you doing today? My name is John Liang, and welcome to another episode of What Card Wednesday.
In this video, we're going to discuss arguably one of the best credit builders out on the open market that could potentially save you up to a hundred and sixty thousand dollars on your first home loan. Now, if you don't have time to stick through the entire video and you're wondering, "Should I get it?" the answer is yes. If you are looking to build credit and repair credit, the Discover it Secured is the card for you.
Now, I highly encourage you to stick around the video to understand more specifically what is a secured card, the exact benefits to the Discover it Secured, and how exactly a Discover it Secured is going to set you on the path to potentially saving up to a hundred and sixty thousand dollars on a first home loan. And before we get going, please feel free to drop me one of these. It would help me out a ton, and I appreciate your support. Let's go ahead and dive in.
Discover it Secured, as the name would imply, it's a secured card. What exactly does that mean? A secured card just simply means you need to have a security deposit in order to have a credit line. So, if Discover approves you for the card, you're gonna have to have a minimum security deposit starting at two hundred dollars. Now, you can go up to as high as two thousand five hundred dollars, and for every dollar that you put in, Discover will match you and give you a credit limit equal to that amount.
You're probably wondering, "Why would I give a bank a security deposit to then use a credit limit?" Well, here's the thing. A secured card has one purpose, and that is to build your credit profile. You might have no credit, or you need to repair it because it's been damaged. So, this is a temporary thing. This is a one to two-year card maximum. So, you're just putting forward the security deposit to show the bank that you're basically good for the money, right? Keep in mind, you have either no credit or limited credit, so the bank has no idea if they should trust you. By putting forward the security deposit, they know that if you ever just stop paying, well, they can always just take your security deposit and continue on with business.
Now, what I love about the Discover it Secured is after eight months of making consecutive payments, they'll actually automatically consider to upgrade your card from a secured to an unsecured product. And now you're really in the world of credit cards. In addition, the Discover it Secured reports to all three major credit bureaus. That's TransUnion, Experian, and Equifax. And by reporting to the bureaus, that will start helping to build your credit report.
As it comes to features and benefits, this card comes packed. I mean, I was shocked because when I think about secured cards, they're really kind of bottom of the barrel. So, banks don't really give any benefits. Well, Discover it Secured completely upends that model. It comes with 2% cashback on gas and restaurant purchases per quarter, up to a thousand dollars, and 1% cashback on all others. In addition, after the first year, they're gonna match all of your cashback that you earned on the year. So, effectively 4% on the categories of gas and restaurants every quarter for the first thousand dollars, and 1% on all others. That's amazing. In addition, the card has no foreign transaction fees, so travel is no problem.
This next feature is pretty awesome, though. I don't recommend you take advantage of it, but it's great that Discover put it in there, and that is, first late payment is automatically waived. Of course, you want to avoid that because, as I mentioned earlier, by making eight on-time consecutive payments, Discover will automatically evaluate your profile to upgrade you from the secured card to the unsecured card. And once that upgrade happens, you get your minimum deposit back, but you get to keep the credit limit. And I'll bet they'll probably give you a slightly higher credit limit because you've shown that you're a responsible cardholder.
So, how exactly does the Discover it Secured lead you on the path of potentially saving a hundred and sixty thousand dollars on a home loan? The short answer of it is, it starts teaching you the right habits to build a strong credit profile and to be able to pull a strong credit score. By having a stronger credit score, you will qualify for a lower interest rate, and over the course of any loan, you're going to pay much less in interest. For example, I went ahead and looked at myfico.com. If we assume an individual is in the state of Massachusetts looking for a $500,000 loan over 30 years, fixed interest rate, somebody who has excellent credit might potentially pay $220,000 in interest alone over the course of the loan. Whereas somebody with very poor credit might have to pay upwards of $380,000 of interest over the course of the loan.
And so, I'm hoping that drives home the point by just simply taking control of your finances and really understanding credit and starting on the right path with a secured credit card, that you're going to be able to build a strong credit profile and get a strong credit score. So that when you go for things like a home loan, an auto loan, that you're not going to be absolutely hosed by the interest rate.
Now, if you're interested to learn more about how exactly a credit score works, what are some of the levers you can pull to really turbocharge your score, I'll leave that video link at the end of this one. My name is John. This has been What Card Wednesday. I appreciate you all tuning in, and I'll see you next Wednesday. Peace.