Credit card revolving loans are typically unsecured. This type of loan, also known as an evergreen loan, does not require the borrower to provide any form of collateral as a guarantee for the loan. Instead, the creditworthiness of the borrower is assessed based on their financial ability and credit history. This assessment is used to determine whether the borrower is likely to repay the loan. The nature of credit card revolving loans makes them inherently riskier for the lender, as there is no collateral to seize in the event of default. However, this risk is often offset by higher interest rates compared to secured loans.

Choice A is incorrect. Home mortgage loans are typically secured loans. The property being purchased serves as collateral for the loan. If the borrower defaults on their payments, the lender has the right to seize and sell the property to recover their losses.

Choice B is incorrect. Home equity loans are also secured loans. In this case, borrowers use their home's equity as collateral for the loan. If they fail to repay, similar to a mortgage loan, lenders can take possession of and sell the home.

Choice D is incorrect. Small business loans are usually secured by some form of collateral which could be business assets or personal guarantees from business owners in case of default on repayment.

Things to Remember

• Credit card revolving loans are generally unsecured, meaning they do not require collateral such as property or assets.
• These loans are issued based on the borrower's creditworthiness, which includes credit history and financial stability.
• The unsecured nature of credit card loans often results in higher interest rates to offset the increased risk for lenders.