Are Credit Cards the Best Option for the Unemployed?

Of late, the scenario of lending has drastically changed. Whereas traditional lenders would leave no chance unturned to rebuff bad credit applications, online lenders are so liberal that they approve unemployed loans instantly. You can borrow money despite your poor credit history. In abstract, the aim of loan companies is to provide financial assistance to as many borrowers as plausible.

It is easy to have a short-term loan approved even if you have a bad credit history. In fact, you can borrow money if you are out of work. All you need to get the loan is repayment capacity. Though online lenders follow lenient policy to disburse funds, they want you to prove your repayment capacity. They will transfer funds to your account only when you have a steady source of income. However, the situation becomes critical when you are out of work and you have a bad credit history. More often than not, you apply for loans for unemployed with bad credit, but direct lenders turn down the application.

Emergency can pop up anytime even if you are unemployed. What if you do not have enough savings to dip into? How will you tackle the situation if your lender denies you lending money? You still have an option of credit cards for unemployed.

Credit cards for the unemployed

Lenders provide credit cards for the self-employed and those people whose income is fluctuating. Applying for credit cards for the unemployed is not so easy if you do not have a steady source of income such as your full-time employment. Even if your lender approves your loan application, you are likely to get very expensive deal.

Some lenders may provide you with low-income credit cards. The minimum income requirement may vary from £4000 to £10,000 depending on the policy of the lender. Even if you are earning above the threshold limit, there is no guarantee that you will get the best deal.

Before you apply for credit cards for the unemployed, make sure that you have researched well to know about minimum monthly repayments, late payment fees, and the APR. Credit cards for the unemployed may be more expensive than bad credit loans for the unemployed.

What are the other alternatives?

If you have lost your job but you have been earning from additional sources like rental property, freelancing or any other part-time job, you should apply for bad credit unemployed loans instead of credit cards. Unemployed loans are cheaper than credit cards. Further, they carry flexible terms, which mean you can fox your scheduled date according to cash inflows. The processing fees of these loans are also much lower than credit cards.

However, getting a lender to sign off on these loans is not as easy as it seems. If due to any reason you fail to get these loans approved, you should consider other alternatives.

  • Payday loans for the unemployed

You can take out payday loans for the unemployed if you think that you will repay the debt timely. You are eligible to apply for these loans as long as you have any source of income, part-time or full-time. Among short-term loans, payday loans are quickly approved and hence most of the unemployed people find them appealing. However, you should be cautious. Since each lender follows different policy, make sure that you choose the deal with a lower interest rate.

  • Quick loans

Another best loan you can take out during unemployment is a quick loan. These loans come with smaller amount than payday loans and unemployed loans, but lenders will immediately approve your loan application if they are satisfied with your income sources. You do not need to go anywhere. You just have to fill out the form online. Once your application is approved, funds will be transferred to your account. The entire procedure is done within the same day.

  • Doorstep loans

Doorstep loans are the most suitable loans for unemployed people. The disbursal limits for these loans are lower than payday loans and unemployed loans. You just have to submit an application form online and one of the representatives of your loan company will schedule a face-to-face meeting with you at your home. The agent will try to figure out your credit needs and monthly income.

The agent will decide on the disbursal limit after careful consideration of cash inflows and outflows. You will get money on the spot in your hand. You do not need to have a bank account for these loans and the same agent will visit your home to collect the debt. So there is no chance of being fallen behind repayment as long as you have money to pay it off. You can also apply for these loans if you are living on benefits.

Credit cards might be very expensive for unemployed people. Instead, you should focus on loans for unemployed with bad credit. If you are struggling to have this loan approved, you can consider other alternatives. No matter which loan you take out, repayment can be very hard as you have to pay interest on the top of the principal amount. If you fail to pay back, penalties will mount up and in the end, you will fall into a never-ending circle of debt. The best approach is you should put aside at least 10% of your monthly salary for emergency purpose. The higher the savings, the better it is.

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