tional characteristics of credit card securitization is the small cycle of the receivable (4-5 months). The standard amortization arrangement used in automobile loans, home loans and the like does not apply in case of credit cards. If the collections from the borrowers were to Securitization is the packaging of a chosen group of loans with a suitable level of credit improvement, and the redeployment of these packages to investors. Investors purchase the repackaged assets in the form of securities or loans, which are secured on the original pool and its connected income stream. Securitization thus changes illiquid assets into liquid ones.

A huge bulk of credit card securitization has been accomplished using two dissimilar vehicles - the individual trust and the master trust. The individual formation is a solitary pool of receivables sold to a trust and used for a single security. When the issuer plans to give out another security, it must assign a new group of card accounts and put up for sale the receivables in those accounts to a different trust.

The master trust constitution lets the issuer generate numerous securities from the same pool of receivables. The master trust acts as a pool of receivables to which receivables are added from time to time to give out more securities. The master trust allows the issuer-improved flexibility.

One of the exceptional characteristics of credit card securitization is the small cycle of the receivable (4-5 months). The standard amortization arrangement used in automobile loans, home loans and the like does not apply in case of credit cards. If the collections from the borrowers were to b

ts connected income stream. Securitization thus changes illiquid assets into liquid ones.

A huge bulk of credit card securitization has been accomplished using two dissimilar vehicles - the individual trust and the master trust. The individual formation is a solitary pool of receivables sold to a trust and used for a single security. When the issuer plans to give out another security, it must assign a new group of card accounts and put up for sale the receivables in those accounts to a different trust.

The master trust constitution lets the issuer generate numerous securities from the same pool of receivables. The master trust acts as a pool of receivables to which receivables are added from time to time to give out more securities. The master trust allows the issuer-improved flexibility.

One of the exceptional characteristics of credit card securitization is the small cycle of the receivable (4-5 months). The standard amortization arrangement used in automobile loans, home loans and the like does not apply in case of credit cards. If the collections from the borrowers were to

of receivables sold to a trust and used for a single security. When the issuer plans to give out another security, it must assign a new group of card accounts and put up for sale the receivables in those accounts to a different trust.

The master trust constitution lets the issuer generate numerous securities from the same pool of receivables. The master trust acts as a pool of receivables to which receivables are added from time to time to give out more securities. The master trust allows the issuer-improved flexibility.

One of the exceptional characteristics of credit card securitization is the small cycle of the receivable (4-5 months). The standard amortization arrangement used in automobile loans, home loans and the like does not apply in case of credit cards. If the collections from the borrowers were to

he issuer generate numerous securities from the same pool of receivables. The master trust acts as a pool of receivables to which receivables are added from time to time to give out more securities. The master trust allows the issuer-improved flexibility.

One of the exceptional characteristics of credit card securitization is the small cycle of the receivable (4-5 months). The standard amortization arrangement used in automobile loans, home loans and the like does not apply in case of credit cards. If the collections from the borrowers were to

tional characteristics of credit card securitization is the small cycle of the receivable (4-5 months). The standard amortization arrangement used in automobile loans, home loans and the like does not apply in case of credit cards. If the collections from the borrowers were to be passed straight to the investors, the investors would get paid in around 5-8 months.

This is neither advantageous nor cost-effective. Thus, an exclusive structure is worked out to give a longer life to the security compared to the normal settlement time of a credit card receivable. The technique involves dividing the receivables into finance costs and principal. While the finance fees are employed for paying the coupon on the security, the main settlement is dealt with in any of the two ways:

A. Revolving method: Under this process, the major repayment every month is given to the issuer for purchasing new receivables.

B. Controlled repayment: Under this construction, the main repayment is divided into controlled pre-fixed amortization and is utilized to retire the security over a set period, say a year. The surplus of main collection in any month is reinvested in purchasing new receivables with which the shortfall, in any month, is covered.

Another important characteristic of credit card securitization is the lack of asset support. Credit card receivables proffer no sec