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Collateral
Property or assets offered as security for a loan. If the borrower defaults, the lender can seize the collateral to recover the value of the loan.
More Details
Collateral is a type of asset that is pledged as security for a loan or other type of credit. It is used to reduce the lender's risk, by providing the lender with a way to recover its money if the borrower is unable to repay the loan.
Example
To build credit, you may want to open a secured credit card which uses collateral to guarantee you can pay your credit limit. This is usually in the form of a separate bank account.
Related Terms
Legacy Member
A legacy member is a long-time member of a credit union, with family membership often spanning multiple generations.
Account Holder
A member with an active account, entitled to the institution's services and responsible for managing their account and transactions.
Frozen Account
An account that is temporarily inaccessible, often due to suspected fraudulent activity or a court order.