Financial Security

Avoid Expensive Payday Loans With Unique Credit Card

It is hard to feel safe when you have almost no option to handle an emergency need for cash.  Many people have challenging credit issues through no fault of their own.  Whether it is a loss of job, medical expenses, or a foreclosure in the recent financial crisis, there are millions of Americans that are not able to obtain a credit card.

People with very low credit scores (below 600) are simply seen as too risky by most lending institutions.  Fortunately, there is a company offering a MasterCard branded card to people with tarnished credit histories, a group which has been overlooked and forgotten by the big banks.


Yahoo Finance provides the details about the company, FS Card, and their new credit card call “Build”.


•  Millions of Americans with subprime credit scores don’t have access to credit cards or any other reasonably priced way of borrowing money.

• Income volatility has doubled in the past 30 years, and as a result many of these people are unprepared to cover unexpected expenses that pop up, like medical bills or car repairs.

• Instead, when they’re cash crunched, they often turn to expensive options like payday loans, which commonly charge interest rates of 400%.

• Thousands are trying a new credit card that’s filling the void left by traditional banks. It uses analytics to target subprime borrowers who are on the upswing and offers an unsecured credit card with transparent terms and rates far below payday loans.

Marla Blow thinks she can help.  By offering transparent rates and fees and low spending limits to start, Blow thinks she can carve out a profitable business that also helps people repair their financial bedrock.

Without access to credit cards or traditional bank loans, these people have turned to alternative lending options instead. The payday loan industry — wherein people take out a two-week loan for several hundred dollars that comes with a fee that amounts to a 400% interest rate on average — now serves 19 million households out of some 20,600 locations across the country, according to industry group the Community Financial Services Association of America.

It’s not just low-income people in poor neighborhoods who are using these services, but many, many middle class people.

Response to the card has been strong, especially among those who had previously used payday loans.

And that’s by design. Blow took key features of payday loans — transparency and low borrowing limits — and married them with the benefits of traditional credit cards — lower interest rates, a longer repayment period, and instant access.

It is nice to see someone offering an alternative to payday loans.  It may not be the first choice for the credit challenged, as options such as pre-paid credit cards may be a better place to start.  But it does seem to be an effective tool to help some get their financial house back on a solid foundation.

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