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

36 Pages Posted: 3 Jul 2019 Last revised: 29 Apr 2020

See all articles by Larry Santucci

Larry Santucci

Federal Reserve Bank of Philadelphia

Date Written: 2019-07-02

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.

Keywords: credit cards, secured credit cards, account graduation

JEL Classification: D14, G21

Suggested Citation

Santucci, Larry, Moving into the Mainstream: Who Graduates from Secured Credit Card Programs? (2019-07-02). FRB of Philadelphia Payment Cards Center Discussion Paper No. 19-2. Available at SSRN: https://ssrn.com/abstract=3413858 or http://dx.doi.org/10.21799/frbp.dp.2019.02

Larry Santucci (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States
2155746014 (Phone)

HOME PAGE: http://https://philadelphiafed.org/consumer-finance-institute/researchers/larry-santucci

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