When Credit Card Debt Is Secured

Credit card debt is usually unsecured. But there are some exceptions. Be sure to read the fine print of your credit card agreement.

In most instances, credit card debt is unsecured. This means that the credit card company cannot take any of your property without first getting a court judgment.

(To learn about the difference between secured and unsecured debt, see What Is a Secured Debt? And What Is an Unsecured Debt?)

However, some credit card debt is secured. This happens most often when a department store claims a security interest in all of the products and goods you bought with the store credit card. This feature will be outlined in the fine print of your department store card agreement.

 Sometimes banks also require a security agreement when you get a card, or to restore your ability to use an existing card. In doing so, it require you to post property or cash as collateral for debts incurred on the card.

Always read the fine print of any credit card agreement carefully. If at all possible, avoid cards with security agreements. 

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