What’s the best option for millennials?



Nowadays, for people with a good credit rating, getting money from banks and other financial institutions is a snap; although this is not the case for underserved and unserved customers who have limited access to credit. With the advent of new age fintech companies, it is now possible to benefit from meaningful borrowing options to meet urgent financial needs, regardless of the customer’s position in the credit spectrum.

The traditional options were once credit cards and personal loans, among others, have been supplemented by new options with fintech companies that go beyond the credit score and offer a line of credit or a line of credit. which is now ready to enter traditional finance. .

The line of credit at a glance

Essentially, line of credit is a loan product that allows employees and the self-employed, even if they have a stressed credit history or completely new to credit, to access the line of credit on which they can draw. any time. These lines of credit range from as little as Rs 2,000 to Rs 5 lakh.

These credit lines offered by fintech companies have gone beyond withdrawing money from the bank but offer innovative solutions such as online payment on a merchant site or even scanning and payment on any code. -UPI bars offered by FlexPay. This enables a digital credit card-like experience for customers who previously simply did not have access to credit cards. Customers can apply for these loans digitally on their phones even with incomes as low as Rs 8,000.

Line of credit vis-à-vis credit cards

Credit cards are only available to a small population of prime consumers in India. Currently, there are only 55 million credit card holders, which represents a penetration of around 4 percent of the Indian population. The digital lines of credit offered by new era fintech companies extend access to credit card-type products to Prime, Near-Prime, Subprime, and new to credit customers.

One of the biggest advantages of credit cards is the convenience and flexibility offered by the product and the ability to use it for purchases or cash advances. Lines of credit are now able to offer these same benefits to underserved customers. In addition, the line of credit products only widened the reach of merchants, while they are accepted in various online stores, as one of them built their product on the UPI infrastructure, they are able to offer almost universal acceptance in all physical stores.


The option of a line of credit or a credit card will likely depend on the customer’s credit rating. As only customers with an exceptional credit history are approved for bank credit cards, for the rest of the customer’s lines of credit that offer a digital credit card type experience are the only option.

Previously, the underserved client only had access to personal loans that offered fixed EMI payments. Thus, by opting for a line of credit, customers can benefit from the flexibility of drawing down when they need it and only the amount they need. This, if used wisely, will result in a decrease in outstanding credit and, more importantly, since interest charges are only paid on the amount used, it could lead to a decrease in interest and charges on loans. short term or personal loans.

Lines of credit provide another distinct benefit by giving customers the flexibility to choose their payment amount and even repay without a prepayment penalty. Whatever product a customer chooses, they should keep in mind that borrowing money, in any form, comes with great responsibility. A person’s history as a customer will always be a factor when you apply for a loan or other financial products from financial institutions.

The author, Anil Pinapala, is founder and CEO of Vivifi. Opinions expressed are personal


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