Which of the following is an example of unsecured debt?

Unsecured debt is a type of debt that is not backed by an asset, meaning that if you fail to pay, the lender does not have a direct claim to any specific property. Credit card debt is a prime example of unsecured debt because it is primarily based on the borrower's creditworthiness and promise to repay rather than being tied to any collateral. This is crucial for understanding personal finance, as unsecured debt typically comes with higher interest rates than secured debt because of the increased risk to the lender.

In contrast, a mortgage, auto loan, and home equity loan are all forms of secured debt. These types of loans are backed by specific assets—the home in the case of a mortgage, a vehicle for an auto loan, and the equity in a home for a home equity loan. If borrowers default on these loans, lenders can reclaim the associated assets to recover their losses.