You’re not going to get airline miles with a secured credit card, but you also don’t have to pay 21 percent interest. There are dozens of offers for secured cards on the market. Here’s some tips for making sure you get the best deal you can.

1. Check your credit score first.
While a score in the high 500s or low 600s isn’t going to qualify you for a platinum card, you still might be able to get a regular credit card rather than having to pay a deposit for a secured card.

2. Make sure the bank reports to the three major credit bureaus.
If it doesn’t, the card won’t help you build your credit history or raise your score.

3. Look for a detailed list of all fees you will be charged.
Activation fees, annual fees, program fees, monthly servicing fees and others can add up quickly. A card with a $250 limit that charges $208 up front not only leaves you with little room for spending, it also leaves you with a high balance-to-available-credit ratio, and could hurt your credit score instead of helping it.

4. Don’t settle for a sky-high interest rate.
Some banks charge 19.9 percent interest or more for secured cards, but there are cards that charge far less. And some will pay interest on your deposit. Just because you’re looking to repair your credit doesn’t mean you shouldn’t shop around.

5. Make sure your card offers a grace period before interest is charged.
Some secured cards start charging interest right away, but there are plenty that offer the 25-day grace period most regular cards feature.

College seniors are graduating with an average credit card balance of $4,100 – up from about $2,900 in 2004 – and much of that debt is directly related to their education expenses, according to a survey from SLM Corp.

The Reston, Va.-based student lender says college students used credit cards last year more than ever before, with nearly one-third of those surveyed charging direct tuition costs.

In all, 92 percent of undergraduate credit cardholders charged textbooks, school supplies and other direct education expenses, charging an average of $2,200 on education-related expenses, more than double the average of $942 in a 2004 survey.

“Too many students are at risk of overpaying for college by pulling out credit cards to pay for textbooks or even part of their tuition bill, instead of using less-expensive financial aid to cover these items,” said Marie O’Malley, consumer research director for Sallie Mae (NYSE: SLM).

The survey found that half of today’s college students have at least four credit cards, and only 17 percent said they regularly pay off all their balances each month.

If you’ve sworn off credit cards as a way to control your spending, think twice before cutting up your plastic for good. With major credit card companies shutting down dormant accounts, your credit score could take a big hit if one of your high-limit and long-term credit cards gets terminated.

Most companies review an account that’s been inactive for more than a year — meaning no charges or transfers during that time. The reason? It costs companies just to manage an account, even an inactive one.

With credit card companies like American Express (AXP Quote - Cramer on AXP - Stock Picks), Citibank (C Quote - Cramer on C - Stock Picks) and Chase (JPM Quote - Cramer on JPM - Stock Picks) all looking to cut costs, they’re choosing to either impose a maintenance fee or simply close the account down, sometimes with no advance notice. “We think it is unfair, but understandable in this market,” notes Linda Sherry, director of national priorities at Consumer Action, a national nonprofit consumer education and advocacy organization. “We recommend that consumers who are saving a card for a rainy day should use the card several times per year, and pay the balance back in full that month.”

Keeping your card (or cards) active provides more than just a backup in the event of unforeseen expenses; it also adds positive information to your credit history. And your credit history is the first place a lending officer looks when you apply for a loan. A good credit score will help you land the best rates on loans, while a low credit score will block you from all but the most expensive ones.

Your credit score is based on a number of factors, including your ratio of debt to available credit, and the length of your credit history. Having a high limit account closed would lower the amount of your available credit, potentially pushing your overall debt-to-credit ratio above 30%. Carrying debt beyond that 30% threshold can knock down your credit score by up to 100 points or more. The impact on your score could be even larger if the inactive card is one of your older accounts — about 15% of your credit score is based on the length of your credit history. (Find out more on how credit card debt can hurt your credit score.)

So if you’ve stashed some cards away, try to break it out every now and then for small purchases. If your card was recently cancelled, try contacting the company to see if they’ll reopen the account. If they won’t, consider applying for a new card in order to keep your debt-to-credit ratio at a healthy level. Or, better yet, pay down your existing accounts to reduce your debt. For the latest credit card offers, head to BankingMyWay’s credit card section.

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Credit card companies could no longer boost interest rates on existing account balances if the Federal Reserve adopts new rules as written at a meeting set for next Thursday.

But as proposed, the changes also could make it more difficult for millions of people with bad credit to get what’s referred to as a subprime card.

The rules were proposed in May and drew more than 65,000 public comments.

“That’s the highest number we’ve ever received,” said Susan Stawick, a Federal Reserve Board spokeswoman.

Among them: a letter from a single mother of three in Florida who wrote she paid her bill on time but her interest rate shot up from 7.9 to 29.99 percent.

“I would have been better off going to a loan shark. I think their rates are more reasonable,” she wrote.

The changes under consideration would ban that practice and others considered by some to be unfair.

“The proposed rules are intended to establish a new baseline for fairness in how credit card plans operate,” Federal Reserve Chairman Ben Bernanke said in May. “Consumers relying on credit cards should be better able to predict how their decisions and actions will affect their costs.”

South Dakota eliminated the interest rate cap on credit cards almost 30 years ago and has thrived from the industry that employs as many as 20,000.

The proposed limits on subprime cards could cost the state of 788,000 people from 3,000 to 5,000 jobs, said Gov. Mike Rounds.

“In essence it would shut down the low-limit credit card business across the United States,” the Republican said.

Prime credit card companies generally could adapt to the five other proposed rule changes, but there’s not a business model that would work for dealing with the changes to subprime cards, he said.

Rounds said he’s still urging the Fed to reconsider.

The state’s two biggest subprime card issuers are Premier Bankcard and Total Card.

T. Denny Sanford, Premier’s owner, is 15th on the Dec. 8 Business Week list of top American philanthropists with an estimated $706 million in giving since 2004. His estimated net worth is $2 billion.

Greg Ticknor, president of Total Card, said he won’t know the effect until the change is announced Thursday but the company likely would survive by adjusting the types of cards it issues.

Under the current proposal, some of the 70 million Americans with “challenged credit” probably wouldn’t qualify for a card, so they’ll instead rely on payday loans, he said.

“In today’s economy, that’s the opposite of what they should be doing,” Ticknor said of the loss of credit.

Prime card issuers such as Citibank South Dakota, which moved its credit card operation from New York after South Dakota’s 1979 law change, would also feel the change, said Peter Garuccio, American Bankers Association spokesman.

“The Fed’s proposal represents an unprecedented way customers will relate and work with their credit card issuers,” he said.

“What it does, by and large, is limit the ability of issuers to use risk-based pricing. And in so doing, the card companies will have to sort of change their models to figure out how to protect changing risks going forward. It’ll be a big challenge for the business.”

On Thursday, the Fed could adopt the proposals as written or make changes. But it’s unlikely the final rules will stray too far because otherwise, the Fed would have to seek public comment again, Garuccio said.

Travis Plunkett of the Consumer Federation of America said the public comments, most of which are posted on the Fed’s Web site, show deep frustration.

“A good share of these comments weren’t generated by people like me. They were spontaneous from consumers who feel they’ve been treated unfairly by their credit card companies and are literally begging the Fed for help,” he said.

A lot of people acknowledged paying late, often mistakenly, and felt it was unreasonable for their card issuer to increase the interest rate on the balance, Plunkett said.

Another common theme is from people who always pay on time but were hit with a rate increase because the company needed to recoup losses from other cardholders, he said.

“They wake up and get a notice in the mail or a bill telling them that all of a sudden their interest rate is double or triple the rate what it was the day before,” Plunkett said.

The proposed changes would let credit card companies increase the interest rate only on new cards and future purchases or advances, not any current balance.

Another new Fed rule would require firms to apply any payment above the minimum to the part of the balance with the highest interest rate.

Some companies now allow consumers to transfer other card debt at zero interest but then require all payments to go toward that amount, not the part of the balance carrying a higher interest rate, Plunkett said.

The other significant change would affect subprime or “fee harvester” cards used by people with a credit score too low to qualify for a normal card. They typically carry no more than a $500 limit but require a large upfront fee.

The Fed proposal would cap that fee at 50 percent of the credit limit and allow the cardholder to pay off the initial balance over a year, not immediately.

“They are both deceptive and unfair,” the Consumer Federation’s Plunkett said of the cards.

But many of the public comments urge the Fed not to limit the product because it’s a way for some people to rebuild their credit rating.

“If adopted, this rule also would have a disproportionate and adverse impact on minority consumers, who historically have had difficulty obtaining access to credit,” wrote one Arkansas woman.

Miles Beacom, president and CEO of Premier Bankcard, said in a statement the company supports most of the changes but opposes tighter controls on subprime cards.

“In order to be successful, credit card companies must have the ability to price the product based on customer risk,” he wrote to The Associated Press.

Premier is the 10th largest issuer of MasterCard and Visa cards, has more than 3.5 million customers nationwide and a formal complaint rate that’s one of the industry’s lowest, Beacom wrote.

Roger Novotny, head of South Dakota’s Banking Division, said his office typically gets 15 to 25 complaints a month about the state bank.

The company did refund $4.5 million last year to New York customers as part of a settlement reached by the state attorney general claiming Premier Bankcard used deceptive and illegal tactics to market its cards.

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Cash-strapped consumers can expect a special delivery this holiday season: sweeping new rules on credit cards.

Federal regulators will unveil final rules within the next several weeks to restrict credit card practices seen as unfair or deceptive. Proposals would prohibit institutions from practices such as: increasing rates on an outstanding balance, except under limited circumstances; applying consumers’ payments over the minimum to maximize interest charges; and requiring a reasonable amount of time for consumers to make payments.

Consumers have spoken loudly in favor of curbing aggressive pricing. They’ve posted tens of thousands of comments on the Federal Reserve’s Web site, complaining about predatory lenders.

“Please stop credit card companies from committing unfair billing practices. … Honest people need an honest chance,” wrote Laura White in a comment on the Fed’s site.

Meanwhile, the credit card industry has reiterated concerns that the rules will damage its ability to manage risk, leading issuers to raise rates and cut available credit. Meredith Whitney, a prominent analyst and managing director of Oppenheimer & Co., agrees that the rules would tamp access to credit, and wrote recently in the Financial Times that the rules will lead to the “severe unintended consequence” of pulling credit from consumers to the tune of $2 trillion, or 40 percent of unused credit lines.

“With so many Americans relying on their credit cards as a major source of liquidity, it would be equivalent to a major pay cut,” Whitney wrote.

While there’s no crystal ball to peek at the rules before they are finalized, Ken Clayton, managing director of the American Bankers Association’s card policy council, expects that the Fed will “move aggressively.”

“What you’re going to see is an unprecedented change in the way consumers deal with their card companies,” Clayton said. “In light of the current economic uncertainties, it’s important that all of us understand the full impact of these regulations on consumers and the economy before we can understand (whether they are) successful.”

One point of contention regards the provision that would prohibit issuers from increasing the interest rate on outstanding balances. The regulators’ interim proposal allows for exceptions to this rule, such as when a minimum payment is not received within 30 days of the due date. The credit card industry has argued that the 30-day delinquency is too long, a position backed by the Office of the Comptroller of the Currency, the primary federal regulator of national banks, which account for almost 80 percent of U.S. credit card lending.

“We believe the proposed restriction is unnecessarily stringent and would severely curtail the ability of creditors to react to adverse changes in a borrower’s risk characteristics during the term of the account,” the OCC told the Fed in public comments. “The period should be long enough so that payment on the account is clearly late, for example, five days after the payment due date, and before a new credit cycle begins and the next periodic statement is prepared.”

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