A Brief Overview of Secured Credit Cards: Capital One® Secured MasterCard® vs Citi® Secured MasterCard®
Most people who look into secured credit card options do so in order to build credit. Bad credit can happen to anyone, whether due to financial difficulties or simply because they have not had enough time to establish a solid credit score.
Luckily, options like the Capital One® Secured MasterCard® and Citi® Secured MasterCard® exist. Both of these cards are intended for customers who want to boost their credit scores without limiting their ability to make purchases.
In general, secured credit cards help build credit scores by adjusting a customer’s credit limit to equal the security deposit that the customer makes at the beginning. This way, no one will make excessive purchases that they cannot pay back. By paying all secured credit card payments on time, your credit score will get higher and higher.
Additionally, secured credit cards tend to have inexpensive fee structures. One of the biggest reasons for this is to help the customer continue to make purchases without being bogged down by unnecessary charges. As you will see throughout this article, the Capital One® Secured MasterCard® and Citi® Secured MasterCard® tend to follow this rule.
Many of those interested in applying for a secured credit have asked a few common questions, which we will answer in our analysis:
- What are the pros and cons of a Capital One® Secured MasterCard®?
- What are the pros and cons of a Citi® Secured MasterCard®?
- How do I apply for a Capital One® Secured MasterCard® and a Citi® Secured MasterCard®?
- What are the Citibank® and Capital One® Secured MasterCard® limits?
Our goal is to give you enough information to make an informed decision throughout this process. If you have decided that a secured credit card is the best way for you to build credit, then two of your best bets may be the Capital One® Secured MasterCard® and Citi® Secured MasterCard®. Ultimately, everyone looks for something slightly different, and it will be up to you to decide which one you pursue.
Comparison Review List
While there are many secured credit card options out there, the two we will focus on throughout this article are:
For a side-by-side comparison of the two cards, keep reading. For those of you who want to focus specifically on just one of the cards, feel free to navigate directly to our reviews featured later in this article.
High Level Comparison Table
Secured Credit Card
Capital One® Secured MasterCard®
Citi® Secured MasterCard®
The Pros: Capital One® Secured MasterCard®
Image Source: Secured Credit Cards
The Capital One® Secured MasterCard® has many advantages, some of which are revealed in the table above. The first advantage you may have noticed is that Capital One® Secured MasterCard® has no annual fee. While this is not a truly unique feature for secured credit cards, it is very important to note when weighing your options.
Another advantage is that the Capital One® Secured MasterCard® has a very flexible range of deposit options. Keep in mind that secured credit cards will only raise your credit limit depending on the amount of your security deposit. The lower your security deposit, the less you can spend, and vice versa.
What makes the Capital One® Secured MasterCard® limit unique, however, is that customers have a lot more leeway when making their first deposits. Because Capital One is a reputable company that understands the importance of building credit, a customer’s minimum security deposit can be as low as $49 to get a security deposit of $200.
Most secured credit cards simply accept your deposit and automatically set your credit limit at that level. The Capital One® Secured MasterCard®, on the other hand, looks at your credit score and any other financial hardships that you have faced and reassesses how high or low your deposit can be.
Additionally, if you cannot pay the security deposit on your Capital One® Secured MasterCard® upfront, you can pay it in installments, as long as you send them the full amount within 80 days of your approval. If you are on a fixed income, then advantages like this may be reason enough to apply for a Capital One® Secured MasterCard®.
Another key feature is the Capital One® Secured MasterCard® limit increase. Since Capital One is willing to work with its customers to help build credit and establish low security deposits, it gives customers a chance to build their credit limit up to $3,000. This Capital One® Secured MasterCard® limit increase is helpful for a number of reasons.
The first is that it gives Capital One® Secured MasterCard® holders a chance to use their card for all of the purchases they want. If the credit limit was too small, card holders would have to apply for other cards or make more frequent money withdrawals. In this way, the Capital One® Secured MasterCard® limit creates a little more financial independence.
Another reason the Capital One® Secured MasterCard® limit increase is beneficial to customers is that it is incredibly flexible to adjust. Since secured credit cards are meant to increase credit scores, you can lower or raise your Capital One® Secured MasterCard® limit at any time. If you are afraid you are spending too much because your credit limit is too high, Capital One will work with you to make adjustments.
All of these points may make you want to rush out and apply for a Capital One® Secured MasterCard®. What you have to keep in mind, however, is that no secured credit card is perfect. In our next section, we lay out some of the disadvantages of a Capital One® Secured MasterCard®.
All-in-One Change Management Tools
Top Rated Toolkit for Change Managers.
Get Your Change Management Tool Today...
The Cons: Capital One® Secured MasterCards®
In order to give you all of the pertinent information, we will lay out some of the disadvantages of having a Capital One® Secured MasterCard®. Perhaps the biggest setback with this card is the high APR, or Annual Percentage Rate, of 24.99%.
A variable APR is a percentage rate that fluctuates due to changes in the index interest rate. The higher your variable APR is, the higher your interest rates will be, which could ultimately cost you more money than it’s worth.
On the other hand, this high variable APR will only affect you if you are not paying your Capital One® Secured MasterCard® balance on time. The more money you leave on the balance, the more you will be paying off later.
If you do pay your monthly balance on time, however, you will not be affected by the high interest rates. Interest will not accrue, and you will only owe money for what you have purchased. Again, this is why some of the advantages and disadvantages of secured credits vary depending on the person.
The other disadvantage is that Capital One® Secured MasterCards® do not offer rewards. This is not unusual for secured credit cards. If you are looking for cash back or a points system, you will be better off applying for more traditional credit cards. The few secured credit cards that do offer rewards typically come with higher security limits and reduced flexibility, which may end up being more of a hassle than it’s worth.
The Pros: Citi® Secured MasterCard®
Now that we have laid out some of the advantages and disadvantages of Capital One® Secured MasterCard®, we would like to discuss the effectiveness of the Citi® Secured MasterCard®. If you are looking for the most straightforward card you can get, a secured credit card from Citibank® may be the one for you.
Essentially, a Citi® Secured MasterCard® follows all of the basic rules for secured credit cards. For instance, your credit limit will equal your security deposit. Additionally, if you pay off your bill every month, you will build credit. In the long run, this will give you an opportunity to open an unsecured, more traditional credit card.
If a secured credit card from Citibank® sounds simple, that’s because it is. As long as you are approved, you will have the option of depositing between $200 and $2,500 to get started. This should be a wide enough range for just about all income levels. The more you put in it upfront, the more you will be able to spend.
In addition, a secured credit card from Citibank® has a slightly lower variable APR of 22.24%. Again, this will be an advantage if you cannot pay your bill on time. If your financial situation makes it impossible to afford necessary purchases, then this lower APR should be the number one feature you look for. While we would always recommend paying your Citi® Secured MasterCard® balance on time, we recognize that it is not always possible to do so.
Unlike the Capital One® Secured MasterCard®, Citi® Secured MasterCard® comes with a few perks when you use them for purchases. We cannot call these rewards because you will not earn cash back, but some of these perks could help you in the long run.
For instance, the Citi® Secured MasterCard® offers its customers rental car insurance, purchase protection, travel accident insurance, and extended warranty protection. The Citi® Secured MasterCard® does not take the term “security” lightly. One of the biggest advantages here is that Citi® Secured MasterCard® will help keep you covered, no matter the situation.
Finally, a secured credit card from Citibank® gives you one of the best chances of opening an unsecured card later. While some secured credit cards report to one or two of the national credit bureaus, Citibank® reports to all three: Experian, TransUnion, and Equifax.
The reason that Citibank® reports to all three credit bureaus is to make sure your good credit behaviors are noticed. As long as you pay off your Citi® Secured MasterCard® balance on time, your credit score will continue to rise, and you will more easily qualify for traditional credit cards in the future.
Similar to the Capital One® Secured MasterCard®, the Citi® Secured MasterCard® comes with no annual fees. Again, this is a common practice among secured cards, but it is important to note since some will try to tack one on.
The Cons: Citi® Secured MasterCards®
There are a few negatives associated with Citi® Secured MasterCards® that should be noted, however. Unlike a lot of secured credit cards, a secured credit card from Citibank® will require a more extensive financial background check.
For instance, if you have had to declare bankruptcy in the last two years, your Citi® Secured MasterCard® application will most likely be denied. With that in mind, the card may be better suited for those who have not had a chance to build credit, like recent college graduates.
Therefore, those who have built a poor credit score due to financial hardships will have a more difficult time securing a Citi® Secured MasterCard® than those who are simply getting started.
At the same time, the credit limit is not as flexible for the Citi® Secured MasterCard® as it is for Capital One. The amount you put in is the amount you can spend. Simply because you have had more financial difficulties does not give you the opportunity for credit limit breaks.
There will be other fees to keep in mind, such as late payment and returned payment fees of up to $35 each. The Citi® Secured MasterCard® also charges for balance transfers of $5 or 3% of the amount of each transfer, whichever is greater.
Nevertheless, keep the Citi® Secured MasterCard® in mind if you do not think you can afford to pay your monthly balance every month. While you will have to qualify based on your financial background, the slightly lower variable APR could be what appeals to you.
Image Source: Applying for a secured credit card
Conclusion: Choosing Between the Capital One® Secured MasterCard® and Citi® Secured MasterCard®
If you have decided that a secured credit card is right for you, your next step is to determine which one will meet your personal goals. While the Capital One® Secured MasterCard® and Citi® Secured MasterCard® have a lot in common, there are a few differences that should help you choose between them.
Perhaps the most important thing you can do now is decide which features you are looking for most. If you are looking for a flexible credit limit, the Capital One® Secured MasterCard® will give you a wide range of limits that you can easily adjust.
On the other hand, if a lower variable APR is what’s most important, consider a secured credit card from Citibank®. As long as you can provide enough proof that your financial background is stable, you should have no problems qualifying for one of these cards.
Once you have made up your mind, the application for both secured cards is simple. Since both cards are offered by major companies, you can visit their websites to complete the application. Find the Capital One® Secured MasterCard® here and Citi® Secured MasterCard® here.
Do not forget that there are other secured cards to choose from if neither of these work for you. Picking the right one will be critical for how high your credit score can go. Remember to weigh the pros and cons of each and do not be afraid to send in an application.
AdvisoryHQ (AHQ) Disclaimer:
Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.
Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.