Verdict: With a low $29 annual fee and reasonable 18.24% interest rate, the Citi Secured Mastercard is one of the best for building or re-building your credit. Citi reports all your payments to the three major credit bureaus and, after 18 months of on-time payments, Citi can convert your card into an unsecured Citi credit card.

Overview: A secured credit card from a reputable company is the best way to build or re-build your credit. Whether you are just starting out your financial life or are recovering from a bankruptcy or foreclosure, a secured credit card that reports to the three major credit card agencies is the first step.

The Citi Secured Mastercard is one of a handful of secured cards with fair terms, a low annual fee and a low deposit required to start your account.

How this Card Works:
Deposit between $200 and $5000 into a Citi CD (Certificate of Deposit), where it will earn interest. The posted rate as of February 1, 2010, according to the Citi website, is 4% with an Annual Percentage Yield (APY) of 4.07%.

Once you’ve opened the CD, apply for the Citi Secured Mastercard. As soon as you’re approved, you can begin borrowing against your CD and building your credit rating.
There are no minimum income requirements to receive this credit card, and no co-signer is required.

The card offers easy online bill pay through Citi’s website.
If your card is converted to a regular Citi MasterCard any time after 18 months, you’ll gain access to additional features, benefits and rewards — including cash rewards — available through Citi’s line of credit cards.

Fees
Other than a $29 annual fee for the card, there are no other fees associated with the credit card — unlike many other secured credit cards. The current interest rate on this card is 18.24%.
The CD is subject to early withdrawal fees should you decide to take the money out of the account prior to the 18-month term. However, there should be no reason to do this since you can simply use your credit card to borrow against the CD.
If you do close the CD account early, your credit card will be canceled, too, which could negatively impact your credit rating.

Benefits
Most secured credit cards are bare bones — no benefits, no rewards, no perks. The Citi Secured Mastercard goes above and beyond in this regard, offering a few nice benefits for cardholders.

• Retail purchase protection against accidental damage or theft on most purchases for up to 90 days
• Car rental insurance (Collision Damage Waiver/Loss Damage Waiver) up to $25,000 per accident
• Zero percent liability on unauthorized charges
• Citi MasterCard Payment tag with PayPass for convenient shopping and no signature required for most purchases under $25
• Optional access to Citi’s CreditMonitor service (additional fees apply)

Pros

• Low annual fee (for a secured credit card)
• Reports to all three credit bureaus
• Option to convert to a regular Citi MasterCard after 18 months of on-time payments
• Your money earns interest in the Citi CD
• No co-signer or minimum income requirements
• No credit history required
• Car rental insurance
• 90-day purchase protection
• Online bill pay

Cons

(2 votes, average: 4.00 out of 5)

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