<PAGE>   1
                                                                    Exhibit 4.7






                    ----------------------------------------


                    PREFERRED SECURITIES GUARANTEE AGREEMENT

                        Household International, Inc.

                        Dated as of __________, 2000


                    ----------------------------------------

<PAGE>   2

                           CROSS-REFERENCE TABLE*

<TABLE>
<CAPTION>
Section of Trust Indenture                         Section of
Act of 1939, as amended                            Guarantee Agreement
--------------------------                         -------------------
<S>                                                <C>
310(a)  .........................................  4.1(a)
310(b)  .........................................  4.1(c)
310(c)  .........................................  Inapplicable
311(a)  .........................................  2.2(b)
311(b)  .........................................  2.2(b)
311(c)  .........................................  Inapplicable
312(a)  .........................................  2.2(a)
312(b)  .........................................  2.2(b)
313     .........................................  2.3
314(a)  .........................................  2.4
314(b)  .........................................  Inapplicable
314(c)  .........................................  2.5
314(d)  .........................................  Inapplicable
314(f)  .........................................  Inapplicable
315(a)  .........................................  3.1(b)
315(b)  .........................................  2.7
315(c)  .........................................  3.1(a)
315(d)  .........................................  3.1(a)
316(a)  .........................................  5.4(a), 2.6
</TABLE>
--------------------

*     This Cross-Reference Table does not constitute part of the Guarantee
      Agreement and shall not affect the interpretation of any of its terms or
      provisions.

<PAGE>   3


                    PREFERRED SECURITIES GUARANTEE AGREEMENT



     This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of March __,
2000, is executed and delivered by Household International, Inc., a Delaware
corporation (the "Guarantor"), and  Wilmington Trust Company, a Delaware
banking corporation, as trustee (the "Preferred Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Household Capital Trust V, a Delaware
statutory business trust (the "Issuer").

     WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of March __, 2000 among the trustees of the Issuer
named therein, the Guarantor as Sponsor and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof $___________ aggregate stated liquidation amount of
Preferred Securities designated the ____% Trust Preferred Securities (the
"Preferred Securities");

     WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth in this Guarantee Agreement, to pay to the Holders of the
Preferred Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein;

     WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee Agreement") in substantially
identical terms to this Guarantee Agreement for the benefit of the holders of
the Common Securities (as defined herein) except that if an Event of Default
(as defined in the Indenture (as defined herein)), has occurred and is
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee are subordinated to the rights
of Holders of Preferred Securities to receive Guarantee Payments under this
Guarantee Agreement.

     NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders.


<PAGE>   4

                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATION



SECTION 1.1  DEFINITIONS AND INTERPRETATION.

      In this Guarantee Agreement, unless the context otherwise requires:

     (a)   Capitalized terms used in this Guarantee Agreement but not defined
           in the preamble above have the respective meanings assigned to them
           in this Section 1.1;

     (b)   a term defined anywhere in this Guarantee Agreement has the same
           meaning throughout;

     (c)   all references to "the Guarantee Agreement" or "this Guarantee
           Agreement" are to this Guarantee Agreement as modified, supplemented
           or amended from time to time;

     (d)   all references in this Guarantee Agreement to Articles and Sections
           are to Articles and Sections of this Guarantee Agreement unless
           otherwise specified;

     (e)   a term defined in the Trust Indenture Act has the same meaning when
           used in this Guarantee Agreement unless otherwise defined in this
           Guarantee Agreement or unless the context otherwise requires; and

     (f)   a reference to the singular includes the plural and vice versa.

     "Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933 as amended or any successor rule thereunder.

     "Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.

     "Covered Person" means any Holder of Preferred Securities.

     "Distributions" means a distribution payable to holders of the Preferred
Securities or the Common Securities in accordance with Section 6.1 of the
Declaration.

     "Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement.

     "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by the Issuer:  (i) any accrued and unpaid Distributions which
are required to be paid on such Preferred Securities to the extent the Issuer
shall have funds


<PAGE>   5

available therefore, (ii) the redemption price, including all accrued and
unpaid Distributions to the date of redemption (the "Redemption Price") to the
extent the Issuer has funds available therefor, with respect to any Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Notes to the Holders in exchange for
Preferred Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment, and (b) the amount of assets
of the Issuer remaining available for distribution to Holders in liquidation of
the Issuer (in either case, the "Liquidation Distribution").  If an Event of
Default under the Indenture has occurred and is continuing, the rights of
Holders of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee Agreement are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments.

     "Holder" shall mean any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any entity directly or indirectly controlling or
controlled by or under direct or indirect common control with the Guarantor.

     "Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate
of the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives or agents of the Preferred
Guarantee Trustee.

     "Indenture" means the Indenture dated as of May 15, 1995 among BankOne
National Association (as successor to Household International, Inc., a Delaware
corporation (as "Debt Issuer") and The First National Bank of Chicago), a
national banking association, as trustee and any indenture supplemental thereto
pursuant to which certain subordinated debt securities of the Debt Issuer are to
be issued to the Property Trustee of the Issuer.

     "Majority in liquidation amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, Holder(s) of Preferred Securities
voting separately as a class, who vote Preferred Securities and the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of the Preferred
Securities voted by such Holders represents more than 50% of the above stated
liquidation amount of all Preferred Securities.



                                      -3-

<PAGE>   6


     "Notes" means a series of debt securities issued by the Debt Issuer
pursuant to the Indenture to be known as ____% Junior Subordinated Deferrable
Interest Notes due ____.

     "Officers' Certificate" means, with respect to any Person, a certificate
signed by two Authorized Officers of such Person.  Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:

     (a)   a statement that each officer signing the Certificate has read the
           covenant or condition and the definition relating thereto;

     (b)   a brief statement of the nature and scope of the examination or
           investigation undertaken by each officer in rendering the
           Certificate;

     (c)   a statement that each such officer has made such examination or
           investigation as, in such officer's opinion, is necessary to
           enable such officer to express an informed opinion as to whether or
           not such covenant or condition has been complied with; and

     (d)   a statement as to whether, in the opinion of each such officer,
           such condition or covenant has been complied with.

     "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.

     "Preferred Guarantee Trustee" means Wilmington Trust Company, a Delaware
banking corporation, until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment pursuant to the terms of this
Guarantee Agreement and thereafter means each such Successor Preferred
Guarantee Trustee.

     "Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, the chairman of the board of directors, the president, any
vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the Preferred Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is


                                      -4-

<PAGE>   7

referred because of that officer's knowledge of and familiarity with the
particular subject.

     "Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.

     "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.


                                   ARTICLE II

                              TRUST INDENTURE ACT


SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.

     (a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be a part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.

     (b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.

SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.

     (a) To the extent the Preferred Securities Trustee shall not also be
acting as Property Trustee at the time action is called for under (i) or (ii)
below, the Guarantor shall provide the Preferred Securities Trustee (i) within
14 days after January 1 and June 30 of each year, a list, in such form as the
Preferred Guarantee Trustee may reasonably require, of the names and addresses
of the Holders of the Preferred Securities ("List of Holders") as of such date,
provided that the Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most recent
List of Holders given to the Preferred Guarantee Trustee by the Guarantor, and
(ii) at any other time, within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such
List of Holders is given to the Preferred Guarantee Trustee.  The Preferred
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.

     (b) The Preferred Guarantee Trustee shall comply with its obligations
under Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.




                                      -5-

<PAGE>   8


SECTION 2.3 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE.

     Within 60 days after May 15 of each year, the Preferred Guarantee Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act.  The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.

SECTION 2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE.

     The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.

SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.

     The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Guarantee Agreement which relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act.  Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the
form of an Officer's Certificate.

SECTION 2.6 EVENT OF DEFAULT; WAIVER.

     The Holders of a Majority in liquidation amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities,
waive any past Event of Default and its consequences.  Upon such waiver, any
such Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.





                                      -6-

<PAGE>   9


SECTION 2.7 EVENT OF DEFAULT; NOTICE.

     (a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default known to the Preferred Guarantee Trustee, unless such defaults have
been cured before the giving of such notice, provided that, the Preferred
Guarantee Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers, of the Preferred Guarantee Trustee in
good faith determine that the withholding of such notice is in the interests of
the Holders of the Preferred Securities.

     (b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default except any Event of Default as to which the Preferred
Guarantee Trustee shall have received written notice or a Responsible Officer
charged with the administration of the Declaration shall have obtained written
notice of.

SECTION 2.8 CONFLICTING INTERESTS.

     The Declaration shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.


                                  ARTICLE III

                          POWERS, DUTIES AND RIGHTS OF
                          PREFERRED GUARANTEE TRUSTEE


SECTION 3.1 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.

     (a) This Guarantee Agreement shall be held by the Preferred Guarantee
Trustee for the benefit of the Holders of the Preferred Securities and the
Preferred Guarantee Trustee shall not transfer this Guarantee Agreement to any
Person except a Holder of Preferred Securities exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Preferred Guarantee Trustee on
acceptance by such Successor Preferred Guarantee Trustee of its appointment to
act as Preferred Guarantee Trustee.  The right, title and interest of the
Preferred Guarantee Trustee shall automatically vest in any Successor Preferred
Guarantee Trustee and such vesting and




                                      -7-

<PAGE>   10

cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.

     (b) If an Event of Default has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders of the Preferred Securities.

     (c) The Preferred Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Preferred Guarantee Trustee.  In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
2.6), the Preferred Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee Agreement, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs;

     (d) No provision of this Guarantee Agreement shall be construed to relieve
the Preferred Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:

     (i)    prior to the occurrence of any Event of Default and after the
            curing or waiving of all such Events of Default that may have
            occurred:

            (A)  the duties and obligations of the Preferred Guarantee Trustee
                 shall be determined solely by the express provisions of this
                 Guarantee Agreement, and the Preferred Guarantee Trustee shall
                 not be liable except for the performance of such duties and
                 obligations as are specifically set forth in this Guarantee
                 Agreement, and no implied covenants or obligations shall be
                 read into this Guarantee Agreement against the Preferred
                 Guarantee Trustee; and

            (B)  in the absence of bad faith on the part of the Preferred
                 Guarantee Trustee, the Preferred Guarantee Trustee may
                 conclusively rely, as to the truth of the statements and
                 the correctness of the opinions expressed therein, upon any
                 certificates or opinions furnished to the Preferred Guarantee
                 Trustee and conforming to the requirements of this Guarantee
                 Agreement; but in the case of any such certificates or
                 opinions that by any provision




                                      -8-

<PAGE>   11

                 hereof are specifically required to be furnished to the
                 Preferred Guarantee Trustee, the Preferred Guarantee Trustee
                 shall be under a duty to examine the same to determine whether
                 or not they conform to the requirements of the Declaration;

     (ii)   the Preferred Guarantee Trustee shall not be liable for any error of
            judgment made in good faith by a Responsible Officer of the
            Preferred Guarantee Trustee, unless it shall be proved that the
            Preferred Guarantee Trustee was negligent in ascertaining the
            pertinent facts;

     (iii)  the Preferred Guarantee Trustee shall not be liable with respect to
            any action taken or omitted to be taken by it in good faith in
            accordance with the direction of the Holders of not less than a
            Majority in liquidation amount of the Preferred Securities at the
            time outstanding relating to the time, method and place of
            conducting any proceeding for any remedy available to the Preferred
            Guarantee Trustee, or exercising any trust or power conferred upon
            the Preferred Guarantee Trustee under this Guarantee Agreement; and

     (iv)   no provision of this Guarantee Agreement shall require the Preferred
            Guarantee Trustee to expend or risk its own funds or otherwise incur
            personal financial liability in the performance of any of its duties
            or in the exercise of any of its rights or powers, if it shall have
            reasonable ground for believing that the repayment of such funds or
            liability is not reasonably assured to it under the terms of this
            Guarantee Agreement or adequate indemnity against such risk or
            liability is not reasonably assured to it.

SECTION 3.2 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.

     (a)    Subject to the provisions of Section 3.1:

     (i)    the Preferred Guarantee Trustee may rely and shall be fully
            protected in acting or refraining from acting upon any resolution,
            certificate, statement, instrument, opinion, report, notice,
            request, direction, consent, order, bond, debenture, note, other
            evidence of indebtedness or other paper or document believed by it
            to be genuine and to have been signed, sent or presented by the
            proper party or parties;

     (ii)   any direction or act of the Guarantor contemplated by this Guarantee
            Agreement shall be sufficiently evidenced by an Officers'
            Certificate;




                                      -9-

<PAGE>   12



     (iii)  whenever in the administration of this Guarantee Agreement, the
            Preferred Guarantee Trustee shall deem it desirable that a matter be
            proved or established before taking, suffering or omitting any
            action hereunder, the Preferred Guarantee Trustee (unless other
            evidence is herein specifically prescribed) may, in the absence of
            bad faith on its part, request and rely upon an Officers'
            Certificate which, upon receipt of such request, shall be promptly
            delivered by the Guarantor;

     (iv)   the Preferred Guarantee Trustee shall have no duty to see to any
            recording, filing or registration of any instrument (or any
            rerecording, refiling or registration thereof);

     (v)    the Preferred Guarantee Trustee may consult with counsel and the
            written advice or opinion of such counsel with respect to legal
            matters shall be full and complete authorization and protection in
            respect of any action taken, suffered or omitted by it hereunder in
            good faith and in accordance with such advice or opinion.  Such
            counsel may be counsel to the Guarantor or any of its Affiliates,
            and may include any of its employees.  The Preferred Guarantee
            Trustee shall have the right at any time to seek instructions
            concerning the administration of this Guarantee Agreement from any
            court of competent jurisdiction;

     (vi)   the Preferred Guarantee Trustee shall be under no obligation to
            exercise any of the rights or powers vested in it by this Guarantee
            Agreement at the request or direction of any Holder, unless such
            Holder shall have provided to the Preferred Guarantee Trustee
            adequate security and indemnity which would satisfy a reasonable
            person in the position of the Preferred Guarantee Trustee, against
            the costs, expenses (including attorneys' fees and expenses) and
            liabilities that might be incurred by it in complying with such
            request or direction, including such reasonable advances as may be
            requested by the Preferred Guarantee Trustee provided, that, nothing
            contained in this Section 3.2(a)(vi) shall be taken to relieve the
            Preferred Guarantee Trustee, upon the occurrence of an Event of
            Default, of its obligation to exercise the rights and powers vested
            in it by this Guarantee Agreement;

     (vii)  the Preferred Guarantee Trustee shall not be bound to make any
            investigation into the facts or matters stated in any resolution,
            certificate, statement, instrument, opinion, report, notice,
            request, direction, consent,



                                      -10-

<PAGE>   13

            order, bond, debenture, note, other evidence of indebtedness or
            other paper or document, but the Preferred Guarantee Trustee, in
            its  discretion, may make such further inquiry or investigation
            into such facts or matters as it may see fit;

     (viii) the Preferred Guarantee Trustee may execute any of the trusts or
            powers hereunder or perform any duties hereunder either directly or
            by or through agents or attorneys and the Preferred Guarantee
            Trustee shall not be responsible for any misconduct or negligence
            on the part of any agent or attorney appointed with due care by it
            hereunder;

     (ix)   any action taken by the Preferred Guarantee Trustee or its agents
            hereunder shall bind the Holders of the Preferred Securities and the
            signature of the Preferred Guarantee Trustee or its agents alone
            shall be sufficient and effective to perform any such action; and no
            third party shall be required to inquire as to the authority of the
            Preferred Guarantee Trustee to so act, or as to its compliance with
            any of the terms and provisions of this Guarantee Agreement, both of
            which shall be conclusively evidenced by the Preferred Guarantee
            Trustee's or its agent's taking such action; and

     (x)    whenever in the administration of this Guarantee Agreement the
            Preferred Guarantee Trustee shall deem it desirable to receive
            instructions with respect to enforcing any remedy or right or taking
            any other action hereunder the Preferred Guarantee Trustee (i) may
            request instructions from the Holders of the Preferred Securities,
            (ii) may refrain from enforcing such remedy or right or taking such
            other action until such instructions are received, and (iii) shall
            be protected in acting in accordance with such instructions; and

     (b)    No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Preferred Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the Preferred
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation.  No permissive power or authority available to the
Preferred Guarantee Trustee shall be construed to be a duty.



                                      -11-

<PAGE>   14


SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.

     The recitals contained in this Guarantee shall be taken as the statements
of the Guarantor and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness.  The Preferred Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee Agreement.


                                   ARTICLE IV

                          PREFERRED GUARANTEE TRUSTEE


SECTION 4.1 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.

     (a)    There shall at all times be a Preferred Guarantee Trustee which
shall:

     (i)    not be an Affiliate of the Guarantor;

     (ii)   be a corporation organized and doing business under the laws of the
            United States of America or any state or territory thereof or of the
            District of Columbia, or a corporation or Person permitted by the
            Securities and Exchange Commission to act as an institutional
            trustee under the Trust Indenture Act, authorized under such laws
            to exercise corporate trust powers, having a combined capital and
            surplus of at least 50 million U.S. dollars ($50,000,000), and
            subject to  supervision or examination by federal, state,
            territorial or District of Columbia authority.  If such corporation
            publishes reports of condition at least annually, pursuant to law
            or to the requirements of the supervising or examining authority
            referred to above, then for the purposes of this Section
            4.1(a)(ii), the combined capital and surplus of such corporation
            shall be deemed to be its combined capital and surplus as set
            forth in its most recent report of condition so published.

     (b)    If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).

     (c)    If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and




                                      -12-

<PAGE>   15

Guarantor shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.

SECTION 4.2  APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
             TRUSTEE.

     (a)    Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.

     (b)    The Preferred Guarantee Trustee shall not be removed in accordance
with this Section 4.2 until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.

     (c)    The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation.  The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred Guarantee Trustee.

     (d)    If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee.  Such
court may thereupon after such notice, if any, as it may deem proper and
prescribe, appoint a Successor Preferred Guarantee Trustee.


                                   ARTICLE V

                                   GUARANTEE


SECTION 5.1 GUARANTEE.

     The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim which the Issuer may have or assert.  The Guarantor's obligation
to make




                                      -13-

<PAGE>   16

a Guarantee Payment may be satisfied by direct payment of the required amounts
by the  Guarantor to the Holders or by causing the Issuer to pay such amounts
to the Holders.

SECTION 5.2 WAIVER OF NOTICE AND DEMAND.

     The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

SECTION 5.3 OBLIGATIONS NOT AFFECTED.

     The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:

     (a)    the release or waiver, by operation of law or otherwise, of the
            performance or observance by the Issuer of any express or
            implied agreement, covenant, term or condition relating to the
            Preferred Securities to be performed or observed by the Issuer;

     (b)    the extension of time for the payment by the Issuer of all or
            any portion of the Distributions, Redemption Price, Liquidation
            Distribution or any other sums payable under the terms of the
            Preferred Securities or the extension of time for the performance of
            any other obligation under, arising out of, or in connection with,
            the Preferred Securities (other than an extension of time for
            payment of Distributions, Redemption Price, Liquidation Distribution
            or other sum payable that results from the extension of any interest
            payment period on the Notes or any extension of the maturity date of
            the Notes permitted by the Indenture);

     (c)    any failure, omission, delay or lack of diligence on the part
            of the Holders to enforce, assert or exercise any right, privilege,
            power or remedy conferred on the Holders pursuant to the terms of
            the Preferred Securities, or any action on the part of the Issuer
            granting indulgence or extension of any kind;

     (d)    the voluntary or involuntary liquidation, dissolution, sale of any
            collateral, receivership, insolvency, bankruptcy, assignment for
            the benefit of creditors,





                                      -14-

<PAGE>   17

            reorganization, arrangement, composition or readjustment of debt
            of, or other similar proceedings affecting, the Issuer or any of
            the assets of the Issuer;

     (e)    any invalidity of, or defect or deficiency in the Preferred
            Securities;

     (f)    the settlement or compromise of any obligation guaranteed hereby or
            hereby incurred; or

     (g)    any other circumstance whatsoever that might otherwise constitute a
            legal or equitable discharge or defense of a guarantor, it being
            the intent of this Section 5.3 that the obligations of the
            Guarantor hereunder shall be absolute and unconditional under any
            and all circumstances.

There shall be no obligation on the Holders or any other Person to give notice
to, or obtain consent of, the Guarantor with respect to the happening of any of
the foregoing.

SECTION 5.4 RIGHTS OF HOLDERS.

     (a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Guarantee Agreement or exercising any trust or power conferred
upon Preferred Guarantee Trustee under this Guarantee Agreement.

     (b) If the Preferred Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against the Issuer, the
Preferred Guarantee Trustee or any other Person.

SECTION 5.5 GUARANTEE OF PAYMENT.

     This Guarantee Agreement creates a guarantee of payment and not of
collection.

SECTION 5.6 SUBROGATION.

     The Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Guarantee Agreement; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire



                                      -15-

<PAGE>   18

by way of subrogation or any indemnity, reimbursement or other agreement, in
all cases as a result of payment under this Guarantee Agreement, if, at the
time of any such payment, any amounts are due and unpaid under this Guarantee
Agreement.  If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.

SECTION 5.7 INDEPENDENT OBLIGATIONS.

     The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Preferred Securities and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.


                                   ARTICLE VI

                   LIMITATION OF TRANSACTIONS; SUBORDINATION


SECTION 6.1 LIMITATION OF TRANSACTIONS.

     So long as any Preferred Securities remain outstanding, if there shall
have occurred and is continuing any event that would constitute an Event of
Default or an Event of Default under the Declaration, then (a) the Guarantor
shall not declare or pay any dividends on, or purchase, acquire or make a
distribution or liquidation payment with respect to any of its capital stock
(other than (i) repurchases, redemptions or other acquisitions of shares of
capital stock of the Guarantor in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Guarantor's capital stock for any
other class or series of the Guarantor's capital stock, or (iii) the purchase
of fractional interests in shares of the Guarantor's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged), and (b) the Guarantor shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem
any debt securities (including guarantees) issued by the Guarantor which rank
pari passu with or junior to the Notes.  The foregoing, however, will not apply
to any stock dividends paid by the Guarantor where the dividend stock is the
same stock as that on which the dividend is being paid.



                                      -16-

<PAGE>   19


SECTION 6.2 RANKING.

     This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Guarantor, including the Notes, except those made pari
passu or subordinate by their terms, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor and (iii)
senior to the Guarantor's common stock.


                                  ARTICLE VII

                                  TERMINATION


SECTION 7.1 TERMINATION.

     This Guarantee Agreement shall terminate upon full payment of the
Redemption Price of all of the Preferred Securities and Common Securities upon
the distribution of the Notes to the Holder's of all of the Preferred
Securities or upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer.  Notwithstanding the foregoing,
this Guarantee Agreement will continue to be effective or will be reinstated,
as the case may be, if at any time any Holder of Preferred Securities must
restore payment of any sums paid under the Preferred Securities or under this
Preferred Securities Guarantee.


                                  ARTICLE VIII

                                INDEMNIFICATION


SECTION 8.1 EXCULPATION.

     (a) No indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Guarantee
Agreement and in a manner such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee Agreement or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by



                                      -17-

<PAGE>   20

reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.

     (b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters
the Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.

SECTION 8.2 INDEMNIFICATION.

     (a) To the fullest extent permitted by applicable law, the Guarantor shall
indemnify and hold harmless each Indemnified Person from and against any loss,
damage or claim incurred by such Indemnified Person by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner such Indemnified
Person reasonably believed to be within the scope of authority conferred on
such Indemnified Person by this in accordance with this Guarantee Agreement,
except that no Indemnified Person shall be entitled to be indemnified in
respect of any loss, damage or claim incurred by such Indemnified Person by
reason or negligence or willful misconduct with respect to such acts or
omissions.

     (b) To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by an Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
8.2(a).


                                   ARTICLE IX

                                 MISCELLANEOUS


SECTION 9.1 SUCCESSORS AND ASSIGNS.

     All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees


                                      -18-

<PAGE>   21



and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding.

SECTION 9.2 AMENDMENTS.

     Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Guarantee Agreement may only be amended with the prior approval of the Holders
of at least 66-2/3% in liquidation amount of all the outstanding Preferred
Securities.  The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Preferred Securities and Common Securities apply to
the giving of such approval.


SECTION 9.3 NOTICES.

     All notices provided for in this Guarantee Agreement shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:

     (a)    if given to the Preferred Guarantee Trustee at the Preferred
            Guarantee Trustee's mailing address set forth below(or such other
            address as the Preferred Guarantee Trustee may give notice of to the
            Holders of the Preferred Securities):

            Wilmington Trust Company
            Rodney Square North
            1100 North Market Street
            Wilmington, DE  19890

            Attn:  Corporate Trust Administration

     (b)    if given to the Guarantor, at the Guarantor's mailing address
            set forth below (or such other address as the Guarantor may give
            notice of to the Holders of the Preferred Securities):

            Household International, Inc.
            2700 Sanders Road
            Prospect Heights, IL  60070

            Attn:  Treasurer

     (c)    if given to any holder of Preferred Securities, at the address set
            forth on the books and records of the Issuer.



                                      -19-

<PAGE>   22


     All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

SECTION 9.4 BENEFIT.

     This Guarantee Agreement is solely for the benefit of the Holders of the
Preferred Securities and subject to Section 3.1(a) is not separately
transferable from the Preferred Securities.

SECTION 9.5 GOVERNING LAW.

     THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

     THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.

                                  HOUSEHOLD INTERNATIONAL, INC.


                                  By:___________________________
                                     Name:   B. B. Moss, Jr.
                                     Title:  Assistant Treasurer


                                  WILMINGTON TRUST COMPANY,
                                  not in its individual capacity but
                                  solely as Preferred Guarantee Trustee


                                  By:___________________________
                                     Name:
                                     Title:




                                      -20-