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Moving into the Mainstream: Who Graduates from Secured Credit Card Programs?

Author

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  • Larry Santucci

Abstract

Secured credit cards--credit cards whose limit is fully or partially collateralized by a bank deposit--are considered a gateway product to mainstream credit access. As consumers demonstrate good usage and repayment behavior, they may be offered the opportunity to graduate to an unsecured credit card. This paper uses anonymized account-level data to examine the prevalence of account graduation in the secured credit card market since 2012. Using a fixed effects regression model, we identify a set of usage and repayment behaviors that are correlated with account graduation.

Suggested Citation

  • Larry Santucci, 2019. "Moving into the Mainstream: Who Graduates from Secured Credit Card Programs?," Consumer Finance Institute discussion papers 19-2, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpdp:19-02
    DOI: 10.21799/frbp.dp.2019.02
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    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/consumer-finance/discussion-papers/dp19-02.pdf
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    More about this item

    Keywords

    credit cards; secured credit cards; account graduation;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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