Jan 24, 2013 Sean Albert
Americans have been leaning more heavily on alternative credit methods, and lending firms are benefiting as a result.
In a recent interview with the Silicon Valley Business Journal, Ryan Gilbert, co-founder and CEO of a San Francisco-based company that provides consumer microloans, said that "there's a lot of excitement" in the sector.
"We're targeting responsible customers who know they have to pay their bills on time, but they may be new to the credit market, or don't have credit from their primary bank," Gilbert told the news source. "We don't offer credit directly to customers," he added. "We offer credit when customers need it in context of their transactions."
Gilbert's company currently has more than 700,000 registered users, the majority of whom are "female heads of households that make between $40,000 and $45,000." These microloans cover different types of short-term payment requirements, including car loans and cable bills.
According to a recent NASDAQ article, prepaid credit and debit cards are also expected to surge in popularity, particularly as an alternative to checking accounts. Prepaid cards generally don't have any many service fees as traditional credit cards.
A Federal Deposit Insurance Corporation study found that in 2011, a quarter of American households had already used alternative financial services at some point.