What Does Unsecured Debit Mean?

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Unsecured debit is debt that you owe that is not borrowed against an asset or any type of collateral. Typically, your signature and promise to pay the debt back is the only thing pledged against the debt.

Risk Vs. Expense

As an unsecured debit has no underlying asset pledged against it, it is considered more risky and interest rates are usually higher due to this risk factor.

Credit Cards

The most common kind of unsecured debt is credit cards. Since they are so easy to get, almost every consumer in the United States has at least one or two credit cards.

Other Unsecured Debt

Personal signature loans with a bank or credit union, utility bills, medical bills and student loans are also unsecured debit.

Bank Overdrafts

Bank overdrafts are also considered unsecured debt, as nothing is pledged against them.

Home And Car

While the home and car start out as secured loans, if these are repossessed or foreclosed on, the balance after the financing company has sold them becomes unsecured debt.

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