Delinquency, balances rise on credit cards, more consumers seek alternative credit
Dec 03, 2012 Sean Albert
TransUnion is reporting that in the third financial quarter of 2012, credit card delinquencies have risen .04 percent. A 4.1 percent increase was also noted on the total balances carried by credit card users in this time period. The greater need for consumers requiring access to short term lending seems to be increasing, but at the same time, the data suggests that more consumers may be finding themselves in a financial bind in which access to capital does not meet or exceed the monthly payment totals for credit cards. This trend may also bode well for alternative credit lenders. Consumers may be maxing out their credit limits. The economic downturn coupled with subprime lending practices regarding the establishment of new lines of credit may also lead to an increased usage of debt collection methods to acquire outstanding balances. Due to these factors, consumers may need to turn to more different borrowing methods in the future. Prepaid cards
Prepaid cards allow the consumer the freedom of carrying a card without the rolling balances owed to creditors. Prepaid cards are often verified or issued in conjunction with a major creditor and can be used in many retail and online locations. Consumers load funds onto these cards and have the ability to add to the balances. Some cards even have the capability to be linked with PayPal to simplify online verification and transactions. Pawn shops
Pawnbrokers often work under the principle that cash is king. Unbanked individuals or those who may not be able to qualify for new or extended lines of credit may turn to short term lenders in Pawn Shops. Consumers can pawn goods against cash loans under stipulated conditions and purchase their items back in a given period. Some brokers buy directly from the client and re-sell merchandise at a retail space in the store. Pawn shops offer an alternative to traditional lines of credit where clients can quickly access cash. Due to the rising delinquency and increased balances on credit cards as reported by Trans Union, it seems that professional lenders have a significant opportunity as to developing methods of attracting unbanked individuals or those seeking credit outside of the traditional methods. New products and services can be developed to cater to the needs of this increasingly large population of Americans.
Prepaid cards allow the consumer the freedom of carrying a card without the rolling balances owed to creditors. Prepaid cards are often verified or issued in conjunction with a major creditor and can be used in many retail and online locations. Consumers load funds onto these cards and have the ability to add to the balances. Some cards even have the capability to be linked with PayPal to simplify online verification and transactions. Pawn shops
Pawnbrokers often work under the principle that cash is king. Unbanked individuals or those who may not be able to qualify for new or extended lines of credit may turn to short term lenders in Pawn Shops. Consumers can pawn goods against cash loans under stipulated conditions and purchase their items back in a given period. Some brokers buy directly from the client and re-sell merchandise at a retail space in the store. Pawn shops offer an alternative to traditional lines of credit where clients can quickly access cash. Due to the rising delinquency and increased balances on credit cards as reported by Trans Union, it seems that professional lenders have a significant opportunity as to developing methods of attracting unbanked individuals or those seeking credit outside of the traditional methods. New products and services can be developed to cater to the needs of this increasingly large population of Americans.
