Discussion Paper

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

Larry Santucci

Senior Advisor and Research Fellow, Consumer Finance Institute

May 2019

DP 19-02 - 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.

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