What Does Unsecured Debit Mean?

Save

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.

References

Promoted By Zergnet

Comments

You May Also Like

Related Searches

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!