- Debt that is not guaranteed by collateral is considered unsecured because there is no assurance for repayment. Most credit cards are unsecured debt, which is why the interest rates are higher than other forms of lending, such as mortgages, which use property as collateral.
liability, not covered, unguaranteed
Related Terms and Acronyms
- Collateral — Definition,
- Any property pledged as security for repayment of a debt.
- Credit Card (CC) — Acronym, Very Important,
➥ A payment card that gives customers access to a revolving line of credit.
- A plastic card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit, with a credit limit and interest rate determined by the borrower's income and credit report.
- Grace Period — Definition,
- If the credit card user does not carry a balance, the grace period is the interest-free time a lender allows between the transaction date and the billing date. The standard grace period is usually between 20 and 30 days. If there is no grace period, finance charges will accrue the moment a purchase is made with the credit card. People who carry a balance on their credit cards have no grace period.
- A window of time where a policyholder still has time to pay insurance premiums.
- Personal Loan — Definition,
- A loan made for personal, family, or household use as opposed to a business-type loan or a long-term mortgage loan to finance real estate.
- Secured Debt — Definition,
- A debt that is secured by a lien on debtor's property that may be taken by the creditor in case of non-payment by the debtor. A common example is a mortgage loan.
- Unsecured Loan — Definition,
- An advance of money that is not secured by collateral.