For those with bad or challenged credit, life can be tough without a credit card. Secured credit cards can help to bridge this gap for those without credit or with damaged credit.

A secured credit card works like this: you deposit a set amount into an account (usually between $300 and $500) and that becomes your credit limit. Your deposit, in essence, ?secures? the credit card. If you don't pay, your money becomes the issuing credit card company's security against default.

After you have established good credit, you can increase the credit line by depositing more money, or the credit card company might extend you more credit without an additional deposit.

Secured credit cards can be an excellent choice for many people, but there are a few things to know:

* Almost all secured credit cards have an annual fee. But these fees can vary greatly from one issuing company to another. Shop around.

* Many banks no longer offer secured credit cards, but often credit unions do. If you want to go this route, you can open an account at many credit unions for as little as $5 and then look into the secured credit card there.

* Most issuing companies will require that you pay the balance in full each month. They don't take your payment due from the money you have deposited ? you must send a payment just as you would for a traditional credit card. These are usually not revolving credit accounts.

If you think a secured credit card is the right thing for you, there are some dos and don'ts to consider. First, the dos:

* DO shop around. Not all offers are the same. Don't take the first offer that appears in your mailbox. Do your own research.

* DO look into getting a secured credit card with a higher balance if that's what you need. In other words, if you have $3,000 to deposit, find an issuing company that will allow you to deposit that much to start so your limit will be higher.

* DO make sure this is the best option for you. If you have never had credit before, or you have severely damaged credit, this might be the only option. But if you think you can get a traditional card, that's a better option.

* DO read all the fine print. Every single word. Some companies charge so many fees, your small $300 deposit might be eaten up in fees before you can ever use the card. Some require you to purchase insurance, for $50 or more a month. But many companies don't do these things and those are the companies you're looking for. Do your research and get the best deal for you.

Although secured credit cards are a good option for many people, there are some don't considerations. These include:

* DON'T be casual about this credit card. If you have damaged credit, using a secured credit card is an excellent way to re-establish your good credit rating. If you have never had credit, this is a way to establish credit so you can acquire traditional credit later.

* DON'T try to go over your limit (or deposit amount). Not only will the charge not go through, but it will be a mark against you. Keep careful records each month you use the card so you know you're not charging right up against the credit limit.