So you have had an unfortunate turn of events in your life financially and you are wondering how you can get back into the game with a credit card. There are numerous advantages to carrying a credit card: you are able to rent a car or reserve a hotel room with ease. Even fuel purchases are more simple with a credit card versus your other bad credit “plastic” option which is a pre-paid debit card. If you have bad credit or even no credit you are typically subjugated to a secured credit card. There are many choices when it comes to secured credit cards, some of these choices you would be better off not using at all, while others put you right back on the path to a good credit standing.

What are the key things you will want to consider when looking at a secured credit card? Take into consideration the following points:

• What are the annual fees?

In our research at CreditSense we have found secured cards with annual fees ranging from as low as $29 to as high as $200. A fee is justified because they are extending an opportunity for people with less than favorable credit to be able to use a credit card. In our opinion however, a fee of $200 is exorbitant and seems to be in place more for a business to capitalize on the misfortune of others than it is a reasonable fee for the service provided.

What is the APR for purchases?

When it comes to annual percentage rates you are not going to get the low rates you would like with a secured credit card. This is an expected and acceptable trade off for being able to have a fully functioning credit card when you have bad credit. The positive to remember here is, the banks are giving you a chance to rebuild your credit and prove that you are worthy of a non-secured credit card like a low interest rate preferred card, or maybe even a card that provides rewards like the Chase Saphire rewards card. It will typically take you 12 to 18 months to prove yourself before you may be qualified for such a card, but in the end it is worth it.

What is the APR for cash advances?

The annual percentage rates for cash advances will typically be higher for secured credit cards just like they are for regular credit cards. A word of caution here, because of the higher interest rates on cash advances this is where many people get into trouble with their credit cards that they are unable to recover from. So, although cash advances are available, avoid them if at all possible.

What is the minimum deposit required?

You will find a wide range of minimum required deposits. This is not one the more critical factors we consider when reviewing secured credit cards. You can find a good secured card like the Citi secured MasterCard that has a low minimum of $200. Another very common minimum balance is one of $500. With almost every secured credit card your minimum balance becomes your available credit limit. You typically can increase your limit by adding additional money to the account you hold with your credit card issuer above what you owe from purchases.

What is the maximum deposit allowed?

The typical maximum deposit allowed is $5000 and therefore you have a $5000 limit if you make a deposit for that amount. Remember each card issuer may have different criteria and procedures for increasing your deposit if you initially deposit less than the maximum allowed.

What is the penalty percentage rate that will occur for missed or late payments?

At CreditSense our goal is to help 1 million people reach an 800+ credit score. Because of this I am not going to focus on what’s going to happen if you miss a payment. Chances are, if you have bad credit, you have already experienced what happens when you miss a payment. It is worth pointing out that your interest rate could increase by as much as 10% to 15%, causing your annual percentage rate to increase to 29.9% or even higher. As a reminder, a secured credit card is simply a tool to help start you down the road to a good credit history. Missing a payment can cripple you in your efforts.

After a specified time frame, usually 12 to 18 months of “on time” payment history does the card transfer into a preferred “non-secured “ credit card?

This is one of the most important and most frequently overlooked criteria by most people who are looking for a secured credit card. Having your secured card be able to convert into a normal preferred credit card after 12 to 18 months is the pot of gold at the end of the rainbow, and it just makes CreditSense to take advantage of the best secured card options available. Your goal should be to position yourself so you can be a credit card user in good standing and not have to tie up your cash to have a credit card. Let me warn you again though, if you miss one payment or are late on even one payment, your credit card issuer will typically view this as an egregious oversight and they have very little flexibility in their rules when it comes to missed payments with their secured credit cards.

Does the account number stay the same when it becomes unsecured?

If the card you apply for keeps the same account number it will keep your payment history and aging of the card intact as your secured credit card becomes unsecured. This option is not available with many secured credit cards, but is a definite added bonus when you qualify for a card that meets this CreditSense criteria.

Do they report to all the major credit bureaus?

The reason you get a secured credit card is so you can start rebuilding your credit profile and payment history with the credit reporting bureaus. If a card doesn’t report to all three of the major bureaus, Equifax, Experian and Transunion, then in our opinion it is a card that isn’t worth your time and effort. Make sure they report every month to all three bureaus.

Is there a grace period for payments?

It is crucial to your credit building success to make sure you know if your card has a grace period or not. Too many people assume all cards are created equal, and all cards have a 10 to 20 day grace period before late penalties are assessed on your account. Many secured cards have very strict rules for payment, including, if a payment is not received and processed on or before the due date it is immediately late and fees will be charged to your account. If this happens it will also ruin your good payment history, and possibly your chances for having your card roll to a preferred, unsecured card. It is worth your time to read the “fees disclosure” provided by your secured credit card issuer.

There are secured credit cards that seem like they have many of the criteria listed above and then you find that if you begin using them they actually act like “Red Flags” on your credit report. The wrong card will alert lenders to the fact that you are a high risk user and many lenders will not approve your credit requests because of this. This clearly defeats the purpose of the secured card, so pick your cards wisely.

There are secured credit cards like the Citi secured MasterCard or the Capital One secured MasterCard, that will help you build your credit score and that makes good CreditSense to me.