Definition
Debt with no collateral behind it, like credit cards and most personal loans. Lenders price the extra risk as higher APRs, which is why unsecured balances are usually the first to pay off.
Why it matters
No collateral means the lender's only protections are your score and the APR, which is why unsecured rates are brutal. In any payoff plan, these balances usually die first.
Example
A household carries a 6.5% mortgage (secured by the house) and a 24% card balance (secured by nothing). The payoff plan sends every spare dollar at the card: same money owed, nearly four times the price.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.