Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. Join them; it only takes a minute:

Sign up
Here's how it works:
  1. Anybody can ask a question
  2. Anybody can answer
  3. The best answers are voted up and rise to the top

I've heard that I can get a lower interest rate with a secured line of credit. If I qualify for a secured line of credit, why would I still want to use an unsecured line of credit?

share|improve this question
up vote 8 down vote accepted

A secured line of credit yields a lower interest rate because if you default on it, the lender simply has you on the hook with whatever you used to secure the line of credit. i.e. if you have a HELOC and you default, they'll foreclose on you and take your house. An unsecured line of credit doesn't have the same type of clout for taking your stuff.

In short, a secured line of credit has a lower interest rate because it's higher risk for you and lower risk for the lender.

share|improve this answer

When you want more credit than you have collateral to cover.

share|improve this answer

Your Answer


By posting your answer, you agree to the privacy policy and terms of service.