Credit Card Alternatives for Millennials with Zero Credit

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    Negosentro | Credit Card Alternatives for Millennials with Zero Credit |Millennials are a huge demographic group. In the Philippines alone, where more than 100 million Filipinos live, millennials represent 1/3 of the total population. Globally, millennials—or those who were born between 1983 and 2000—are said to make up half of the entire world’s workforce.

    Their employment status puts millennials on the map as a key driver of economies in different nations. Here are a couple of notable findings from research studies that have looked into the financial attitude of millennials in general:

    It then becomes interesting to know the profile of Filipino millennials and how they are spending their money from their salaries. Check if any of these apply to you:

    • Most millennials in the Philippines are single—26% are employed, but many of them find it challenging to manage their income. 
    • For 37.9% of millennials in the Philippines, a defining factor of success is financial independence. 
    • Filipino millennials tend to rack up and ignore credit card debt.

    These facts and statistics show that Filipino millennials are aware of the importance of wise spending and saving. Still, due to different factors, they can’t be as financially stable as they would want to be.

    For example, Filipinos are family-oriented, so it’s not uncommon for the young millennials to support their parents, siblings, or relatives financially. Millennials—also called Gen Y—have to split their monthly salary between their personal expenses and those for their family. 

    Thus, even before the next payday comes, Filipino millennial workers may find themselves out of money. They would then look for alternative sources of money to tide them over until they can recover from their financial slump. One of the popular alternatives for Filipinos who need extra money is to get a credit card from banks or other financial institutions. 

    If you’re a first-time credit card user, a bank may give you an initial credit limit of P10,000 to P20,000. This amount may increase every year upon renewal of your credit card, provided that you’re a responsible credit card owner. This means you’re able to make on-time payments, and you don’t go beyond your credit limit.

    Credit cards can be an attractive option for millennial workers for several reasons: 

    • Malls, restaurants, gyms, online stores, online vouchers, and other similar establishments accept credit card payments. There’s no need to always carry around cash when you have a credit card. When you’re out of cash, you can still make purchases using your credit card.
    • You don’t need to pay all of the purchases you made against your credit card in one go. Instead, you’re allowed to pay in installment, although that will mean your account will be charged with interest fees until you’re able to settle the outstanding balance in your credit card.
    • You can take out a cash advance from your credit card. There are times when you really need cash instead of credit, which is why credit card providers offer this kind of benefit.

    However, not everyone can easily get a credit card. This is especially true if you have not built a credit line for yourself with any bank or financial company. Perhaps you don’t have a bank account, so it will be nearly impossible for you to receive an offer to get or apply for a credit card.

    It could also be that you don’t have a complete set of documents for credit card companies to process your application. It’s also possible that your salary doesn’t meet the minimum requirement set by credit card providers.

    Fortunately, there are now several alternatives to credit cards, so you don’t have to feel helpless with your financial problems. Innovative technologies have paved the way for financial technology (fintech) companies to come up with other means of offering credit to those who need it. Because of these innovations, you can gain the much-needed extra cash to augment your budget for yourself and your family.

    The top credit card alternatives for millennials with zero credit include the following:

    1. Cashback Debit Cards

    As the name implies, you can have a debit card issued to you by a bank. To use the card, you have to fund it through your issuing bank. The goal is to help you avoid spending more than what you have. In addition, each time you use your debit card to pay for your online or offline transactions with an affiliated merchant, you can get some rebates to be credit back to your card.

    2. Electronic Wallets

    These are apps that you install on your phone to serve as a wallet where you can keep your funds, send money to someone else, pay bills, buy load, or shop online. A popular example of an electronic wallet app in the Philippines is GCash from Globe Telecom. Whenever you use GCash to load a mobile number, you get rebates that you can then spend on other purchases.

    3. Online Lenders

    If you need cash for personal or family emergencies, you can file for a loan with online lenders. They have an online platform where you can submit a loan application, and unlike credit cards, online loans offer quick approval and processing periods.

    4. Prepaid Cards

    These work like cashback debit cards: you have to load them with money so that you can make cashless payments in online shops or offline stores. Once you use up your funds in your prepaid card, you have to load it up again.

    5. Online Pawning

    Online pawning is another innovative fintech product that’s very useful when you need cash in an instant. You can get a loan in exchange for your items like jewelry or gadget. There’s no physical store similar to traditional pawnshops; instead, you enter the details of the items you wish to pawn, and once appraised, someone from the online pawning company will pick up the item before releasing the money to you.

    To better understand how these alternatives to credit card work, check out the accompanying infographic.

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