Citi Secured Review: Good for Building Credit and Moving On

The 21st century's big credit-building conundrum goes like this: People need a credit card to build credit, but you can't get a credit card until you build your credit. That's where the Citi® Secured Mastercard® comes in. It's specifically designed for people who are new to credit or have only limited credit.

There's nothing fancy about this card — no rewards, no points, no perks. But there's also no annual fee. It's a secured credit card, meaning you have to put down a cash deposit, which will be equal to your credit line, but you can get that money back later, after you've strengthened your credit file and are ready to move up to a regular unsecured card.

Citi® Secured Mastercard®: Basics

• Card type: Secured.

• Annual fee: $0.

• Security deposit: $200 minimum, $2,500 maximum.

• Sign-up bonus: None

• Rewards: None.

• Interest rate: The ongoing APR is 24.74% Variable APR.

Benefits of the Citi® Secured Mastercard®

• No annual fee. Although you are required to provide a security deposit to open your card account, the Citi® Secured Mastercard® charges no ongoing fees. That makes it preferable to many unsecured cards that target people with no credit and pile on outrageous fees — annual fees of up to $99, monthly fees, application fees, even fees to process a payment.

• Reports to credit bureaus. A credit card can help you build credit only if your on-time payments are reported to the credit bureaus — the companies that compile credit reports. The Citi® Secured Mastercard® reports card activity to all three major credit bureaus: Equifax, Experian and TransUnion.

Drawbacks and alternatives

The list of drawbacks for the Citi® Secured Mastercard® is longer than the list of benefits. But that doesn't mean it's a bad card. It's actually a pretty good credit card. But there are other products that are better suited for people in specific circumstances.

• Not optimal for people with bad credit. The Citi® Secured Mastercard® is something of an outlier among secured cards because it targets people with no credit or limited credit rather than those who have damaged their credit through mistakes or bad fortune. For example, your application will be denied if you have had a bankruptcy in the last two years. Those with badly marred credit histories might consider the OpenSky® Secured Visa® Credit Card, which does not require a credit check. However, it charges an annual fee of $35.

• No option for a lower deposit. The $200 minimum deposit on the Citi® Secured Mastercard® is lower than what some other secured cards require, but it can still be an obstacle for those living paycheck to paycheck. With the Capital One® Secured Mastercard®, you may be able to get a credit line of $200 with a deposit of $49 or $99 rather than $200, depending on your creditworthiness. Capital One also makes it possible to pay a deposit in installments instead of all at once. And if you make your first five monthly payments on time, you could get access to a higher credit limit without having to deposit more money.

• High interest rate. As a general rule, secured credit cards charge high interest rates, and the Citi® Secured Mastercard® is no exception. But the APR on your credit card doesn't have to matter. If you pay your balance in full each month (a good habit to develop), you'll never pay any interest. If you do carry a balance from month to month, this card's ongoing interest rate will cost you dearly. Consider the DCU Visa® Platinum Secured Credit Card. The ongoing APR is 13.75%, Variable — considerably lower than that on the Citi® Secured Mastercard®. This card has a $0 annual fee, but it carries a couple of drawbacks of its own: It has a minimum deposit of $500, and you must be a member of Digital Federal Credit Union to qualify. (Membership is relatively easy to establish, but it's still an extra hoop to jump through.)

For other options, see our roundup of the best secured credit cards as well as NerdWallet's best credit cards page.

Should you get the Citi® Secured Mastercard®?

The Citi® Secured Mastercard® is a straightforward option for people trying to build their credit from scratch, but not for those trying to repair a badly damaged credit file. It doesn't give you much reason to hold onto it long-term, but that's kind of the point: Use the card to establish your credit bona fides, then move on to something better.