Cross-collateralization

Cross-collateralization is a method used by lenders to secure one type of loan with the collateral from another. In consumer loans, it is most often used by credit unions. If you have a savings account, an auto loan and a credit card from a single lender, the fine print of the loan may include the auto or the savings as cross-collateral for the credit card. If you default on your credit card, the lender could claim the auto or the savings to pay the default amount.