Let’s be honest, everyone reading this knows someone who has “bad” credit. Some of us know that person very well. For anyone with bad credit, usually the only choice you have when it comes to carrying a credit card is to get a secured credit card or a pre-paid debit card. The simple truth is... most of those credit cards are terrible and they end up hurting your credit. How does the Citi Secured card stack up?
At CreditSense we look at every aspect of your personal credit and give you the information to make informed, intelligent decisions. If you are in a position where a secured credit card is necessary here are a few things to consider:
- What are the annual fees?
- What is the APR for purchases?
- What is the APR for cash advances?
- What is the minimum deposit required?
- What is the maximum deposit allowed?
- What are the penalty APR’s for missed or late payments?
- After a certain amount of “on time” payment history does the card transfer into a regular, non-secured credit card?
- Do they report to all the major credit bureaus?
First let me give you fair warning. As I mentioned above there are secured credit cards that will actually hurt your credit. Many of the specialty cards out there don’t report to all three credit bureaus, or even worse they do report to all three and the credit bureaus and lenders see them as red flags notifying everyone that you are a high credit risk. Add that to the fact that they actually put an artificial cap on your FICO score value and they are nothing less than a toxic asset corroding your finances from the inside out. Sadly for some people those types of cards are the only credit cards they can qualify for, so they become the “best” last resort.
I have reviewed some secured credit card programs that charge fees of $200 or more for the first year! Of course I can understand why they charge something, but $200? That just seems like they are taking advantage of someone else’s misfortune.
Take a look at the Citi Secured MasterCard to see if it meets the CreditSense standards.
Annual Fees
The Citi secured card website and application states the annual fee is $29. The only other applicable fee with this card is the fee for cash advance. For cash advance it is either $10 or 5% of the amount of the cash advance, whichever is greater.
Interest Rates
The Citi application disclosure lists 18.24% for purchases, 25.24% for cash advances, and up to 29.99% for the penalty APR depending on your credit worthiness. These are the advertised interest rates as of February 2011.
Penalty Fees
For the sake of full disclosure I want to make sure you know what you are up against if you are late or miss a payment. The fee for paying late is up to $35 and the fee for a returned payment or insufficient funds is also up to $35. Also remember, that if you make a late payment you most likely won’t qualify for rolling over to a non-secured card, and your APR will go up significantly as well.
What does it take to apply for a Citi Secured Mastercard?
- Complete the online application and then print and sign it.
- Include a signed check or money order for the amount you want your credit limit to be, between $200 and $5,000 with your Citibank secured credit card application. The amount you write your check for becomes your security deposit and it is held in a CD that gains a very small amount of interest for every year you have the secured card, with a minimum of 18 months. You will be billed for your annual fee at a later time.
- Mail your application and funding payment to Citibank New Cardmember Services at the address on the application. If you are approved you will be charged the annual fee later.
- If you are approved, after using the Citi secured MasterCard for 18 months, you “may become eligible” for an unsecured Citi Platinum MasterCard.
The Bottom Line
When it comes to secured credit cards, the Citi secured MasterCard meets the CreditSense criteria and is a reasonable card for those with bad credit challenges, and that makes good credit sense to me.