Credit cards have been a crucial tool for any business professional to access finances along with customer benefits and other privileges and rewards. They give professionals the financial liberty to perform a plethora of credit transactions without worrying about their current bank balance. However, credit cards come with an exorbitant interest rate of up to 40 % per year if the individual is unable to pay off the amount within the prescribed and grace period. This can create a significant impact on the credit score and future credit opportunities that can be an extremely significant deterrent in the case of urgent financial requirements for the business. Alternate personal loans have come in to take the place of credit cards in the urban population. Moreover, there are a few reasons why they are here to stay.
The challenges that come with credit cards
While taking care of business expenses for anywhere from paying electrical expenses to purchasing the latest tech assets or other office requirements, the credit card can be an important tool to access finances when your pocket does not allow you to do so. Credit cards are a preferable method of accessing this finance as they remove the hassles of asking for money from family and friends or taking up other financial favours. Further, they ensure psychological comfort with the ability to pay off the debt in a period of up to 50 days. However, this method has its challenges.
Borrowers cannot sustain their financial stability by consistently taking on debt with their credit cards. Credit card providers often increase the loan base and credit line to around three or four times the monthly income of the business owner. They leave no stone unturned in ensuring that they are able to maximize returns from the provision of this flexibility. Taking on this level of debt can lead to burgeoning financial liabilities each month, and the inability to pay it off can lead to further complications. It could take months for borrowers to clear their outstanding debt and could lead them to a tipping point despite all their efforts to ensure on-time repayment. Credit cards create debt traps and often lead to a significant financial burden due to their high-interest rates at up to 40% of the amount.
Why alternate loans are here to stay
In complete contrast to credit cards, alternate loans offer transparent and scalable options to access money. Business professionals can use the alternate loan to convert their outstanding credit card bill into easy-to-manage Equated Monthly Installment (EMI) repayments – all at a lower interest rate than what comes with pushing your credit card due date. The alternate lending platform can provide personal overdraft facilities such as this to make managing your monthly finances a more seamless and achievable goal.
You can know more about alternate personal loan facilities and providers on digital platforms such as Finserv MARKETS. It offers the leading financial products in the market such as the Bajaj Finserv business loan to help you with your unique needs. The Bajaj Finserv business loan interest rate is competitive and ensures hassle-free access to money without an accompanying financial burden.
Business owners, especially in urban pockets, are increasing using alternate loans to navigate the barriers that come with using credit cards. The personal overdraft facility ensures a pre-approved credit line that can be used as and when the customer chooses to take advantage of it. The interest rate is comparatively lower and is charged only on the amount drawn by the individual and for the period, the credit is availed for. Ideally, borrowers are looking to prevent the accumulation of debt and repay their obligations as soon as they are able to – even well before the payment cycle. The alternate loan gives them an opportunity to prevent non-essential expenses and helps avoid the superficial comfort that comes with the credit line associated with credit cards. It ensures financial discipline, flexibility, and stability and a decreased cumulative interest outgo.
Alternate loan providers are continuing to innovate their offerings and build more transparent products with seamless access. This innovation is driven by the latest tech available in the financial industry. Leading digital platforms such as Finserv MARKETS are keeping up with the trend with easy access to finances within minutes. Overall, credit card offerings are bound to be left behind in the race with alternate personal loans offering flexibility, convenience, and a worry-free credit mechanism.
Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!