Credit Bureau Reporting

• Does the bank report secured credit card activity -- including balance, credit limit and payments -- to the three major credit bureaus? Bankrate.com website writer Leslie McFadden advises that a secured card has no credit-rating benefit if it is not reported to Equifax, Experian and TransUnion.
  
  

Deposit Amount

• What is the minimum required deposit? Make sure it fits into your budget. Many banks accept as little as $200 to $300, according to McFadden. Your credit limit is tied to your deposit since your money guarantees account repayment.
  
  

Bank Account Type

• What type of bank account is required for the card? Bankrate.com writer Pat Curry explains that typical account types include savings accounts, certificates of deposit and money market accounts. Your funds are frozen as collateral and cannot be withdrawn while your credit card account is active.
  
  

Earned Interest

• How much interest will you earn on the security deposit? A good bank gives comparable rates for other financial institutions with the same account types, according to Curry.
  
  

Interest Rate

• What interest rate will you be charged for your credit account? Secured credit cards often have higher than normal interest rates, McFadden warns. Banks know many applicants have no other choice because they are just starting out financially or have collection accounts, bankruptcy or other past problems that require reestablishment of credit. Avoid card issuers that quote very high rates.
  
  

Fees

• Will you be charged any fees for the card? Banks sometimes impose high annual fees, processing fees and other excessive charges, according to Curry. Look for better card sources with more reasonable fees.
  
  

Grace Period

• What is the monthly grace period? Make sure the bank gives you a grace period of 20 to 25 days before it starts charging interest on new purchases. Some secured card issuers give no grace period at all, McFadden warns. This exclusion means you rack up interest charges immediately whenever you use your card.
  
  

Requirements

• Are there requirements you cannot meet? Most people qualify for secured credit cards, even with past financial problems, but some banks have specific requirements. For example, McFadden warns that you may not be eligible if you declared bankruptcy within the previous 12 months or have unpaid liens. Find this out ahead of time so you do not waste time applying if you do not meet the criteria.
  
  

Card Opening

• What is the process for making your deposit once you are approved? Card opening involves processing and approval of your application, opening a bank account, depositing your money and receiving your new credit card. The bank should explain the exact procedure.
  
  

Conversion to Unsecured

• Can you eventually convert the secured account into an unsecured one? Most banks eventually convert secured credit cards into unsecured cards once you have proven yourself through prompt payments and staying within your credit limit, Pulliam Weston explains. The time frame varies, although typically you should qualify for a traditional credit card within a year or two.