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