Consumers who are looking for a no-frills, no-annual-fee secured credit card with which to build credit history might find the Citi^® Secured Mastercard^® offers just what they need. It doesn’t earn rewards and doesn’t have many benefits, but it charges a $0 annual fee and reports account and payment activity to the major consumer credit bureaus.

With a secured credit card, you have to submit a security deposit to the issuer that generally equals your credit limit. A minimum deposit of $200 is usually required, which is the case with the Citi^® Secured Mastercard^®. In all other regards, secured cards work the same as regular credit cards (unsecured cards). You can use the Citi^® Secured Mastercard^® wherever Mastercard is accepted.

Note that a secured card is not the same as a prepaid card. With a prepaid card, you load money and spend what you’ve loaded — there’s no borrowing and you won’t build credit. A prepaid card is more like a debit card than a credit card. By contrast, a secured card is a line of revolving credit that lets you borrow as you need (up to your credit limit) and pay off what you borrow on a regular basis, just like any other credit card.

• Usage is reported to the credit bureaus

  The Citi^® Secured Mastercard^® reports your spending and payment activity to the three major credit bureaus — Equifax, Experian and TransUnion. This allows you to build a good credit score by always paying on time and keeping your utilization low. Just remember that missing a payment can tank your credit score significantly, and maxing your card out will hurt your score as well.

• You might get your deposit refunded

  Citi puts your security deposit into a Collateral Holding Account for an initial term of up to 18 months. If it’s determined you qualify to graduate to an unsecured credit card, you’ll get your deposit refunded. However, note that you’re not guaranteed to graduate to an unsecured card, but you can always get your deposit back once you close the card (minus any outstanding balance and fees).

• Access your credit score for free

  The Citi^® Secured Mastercard^® offers free access to your FICO® Score, meaning as you work to improve your credit score, you can check in on your progress with ease.

• There's no annual fee

  While some cards for people who need to build credit charge an annual fee, the Citi^® Secured Mastercard^®‘s annual fee is $0. That means you can build credit without draining your bank account.

• The card's interest rate is high

  The Citi^® Secured Mastercard^® has a 26.74% (variable) APR. We advise paying off your card in full every billing cycle so as to avoid incurring interest charges. 

• You'll have to submit a security deposit

  The way secured credit cards work is that the applicant must submit a security deposit in the amount of their desired credit limit to the issuer. You still have to pay off what you charge to the card — what the deposit does is protect the issuer should you default on what you owe. With the Citi^® Secured Mastercard^®, the minimum deposit is $200 and the maximum deposit is $2,500.

• You won't earn rewards

  The Citi^® Secured Mastercard^® doesn’t earn rewards. However, that’s not unusual for a card aimed at people with limited. If you’re applying for a secured card to improve your credit score, your focus should be on building a positive payment history and keeping your utilization low rather than earning points or cash back. That said, the Discover it^® Secured Credit Card is a competing secured card that does earn cash back, which we’ll examine in more detail in the alternate card section.

• Beware the foreign transaction fee

  If you use this card while traveling abroad, prepare for a 3% foreign transaction fee on every purchase.

Compare it to the discover it^® secured credit card

 

If you need to build or rebuild your credit, a standout card for credit building is the Discover it^® Secured Credit Card. It’s aimed at folks with poor/limited credit and also charges a $0 annual fee.

While secured credit cards don’t typically offer rewards programs, cardholders with the Discover it^® Secured Credit Card earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically. Plus: Discover will match all the cash back you’ve earned at the end of your first year.

However, don’t let the allure of cash back cause you to spend more than you’ve budgeted. Remember that the main goal with your card is to pay on time and keep utilization low, building a good credit score.

The minimum deposit for the Discover it^® Secured Credit Card is $200 and the maximum deposit is $2,500. After you’ve used your card for seven months, Discover will begin conducting automatic monthly account reviews to see if you qualify to get your deposit refunded and transition to an unsecured card.

The Citi^® Secured Mastercard^® is a fine choice for consumers who want to build credit history and have $200 available for the minimum security deposit. Note that to be eligible, Citi specifies applicants must not have a pending bankruptcy, or bankruptcy history in the past two years. Also, if approved, make sure to provide your bank account information within 14 days to fund the deposit.

If you’re not quite sure the Citi^® Secured Mastercard^® is what you’re looking for, the Discover it^® Secured Credit Card is an alternative secured card with a cashback program and guaranteed monthly reviews (starting after seven months) of your account to see if you qualify to get your deposit back.