9 Great Borrowing Alternatives to Traditional Credit Card Programs

Credit cards have long been a go-to financial tool for many Filipinos, but this doesn’t mean that they’re the only option for accessing a line of credit. If you find it challenging to qualify for a credit card or if you don’t want to get a cash advance, there are still plenty of alternatives that you can tap should you need  immediate additional funds. While having access to a credit card with no annual fee Philippines-based consumers prefer can be ideal for some, there are many alternative lines of credit available nowadays that can help you achieve your goals. 

Simply put, no matter if you’re a credit card holder or not, it’s important to know about your options and alternative sources for lines of credit. Here they are:

Personal Loans from Banks or Lending Institutions

A common alternative to credit cards, personal loans allow you to borrow a fixed amount of money and repay it in monthly installments over a set period. This type of credit product makes budgeting easier by offering predictable repayment schedules and often lower interest rates compared to credit cards. Just like credit cards, however, gaining approval for personal loans typically requires a good credit history; the processing times for loan applications can also range from a few days to weeks.

Digital Bank Loans and Credit Lines

Most digital banks nowadays have loan offerings for their registered users. The amounts can vary greatly, from as low as Php 2,500 to as high at Php 100,000 or even more. What’s even better is that digital banks offer different types of loans that can suit different needs. For instance, Maya has both Maya Personal Loan and Maya Easy Credit. Maya Personal Loan lets you borrow up to Php 250,000, which can be ideal if you need funds to upgrade your home or pay for important bills like tuition and other school fees. It also doesn’t charge you any processing fees and has add-on rates as low as 0.77%.

Meanwhile, Maya Easy Credit is a credit line that lets you borrow up to Php 30,000. You can use this at any time and you only have to pay for the amount you used. So, if you only spent Php 10,000 out of the Php 30,000, you only have to pay Php 10,000 plus a small service fee. It’s a good back-up to have, since you never know when an emergency might strike.

What’s good about digital banks is that they typically have fewer documentary requirements compared to their traditional counterparts. The processing time is also faster. In many cases, you’ll know within one day if your application has been approved or not.

Microfinance Loans

Specifically put up to serve the financial needs of communities with lower incomes, microfinance institutions offer small loans tailored to individuals who might not qualify for traditional banking services. These loans are especially useful for starting micro- and small-sized businesses or addressing urgent financial needs. They are accessible even to those without a credit history and usually require minimal documentation. On the downside, microfinance loans often come with higher interest rates and smaller loan amounts. That said, despite these limitations, they can be a lifeline for entrepreneurs or those needing quick cash for personal expenses.

Buy Now, Pay Later (BNPL) Services

BNPL programs are useful when you need to make purchases and you want to pay for them in installments. These services provide an easy way to manage big-ticket purchases, often with interest-free installments if paid on time; they’re also a great option for people who want to maintain their liquidity. Do note, though, that late payment fees for BNPL services can quickly accumulate. At the same time, this service is typically limited to participating merchants. 

Salary Loans

There are companies that allow their employees to take out salary loans and borrow against their upcoming paychecks. Also called payday loans, these lines of credit are commonly offered by employers as part of their benefits package or through external lending companies. Salary loans are quick and easy to access, as they often do not require collateral. However, take note of the interest rates before borrowing. If they are too high, you might risk falling into a cycle of borrowing if not managed properly. 

Cooperative Loans

Many legitimate cooperatives in the Philippines offer loans to their members at lower interest rates compared to traditional banks. To qualify for one, you need to be a member of the organization and contribute to the cooperative’s savings fund. This type of loan is particularly beneficial because it redistributes profits to members. It’s excellent for community-based financial needs or small-scale business ventures, like selling hand-crafted accessories or baked goods. However, the loan amounts may depend on your savings with the cooperative, and being a member means paying regular contributions to the organization.

Pawnshop Loans

Do you have pawnable items like jewelry, smart devices, or home appliances? Then you can probably ask for a line of credit from your local pawnshop. These establishments let you borrow money by pledging valuables as collateral. The process is straightforward, with no credit checks required, making it a fast way to access cash. Just like other alternative options, however, it’s possible for the lender to have higher interest rates. This is compounded by the risk of losing your collateral if you fail to repay the loan. 

Peer-to-Peer (P2P) Lending

P2P lending platforms connect borrowers directly with individual lenders, usually facilitated through digital lending platforms. These lending options offer flexible terms and competitive rates, although it often requires a strong credit profile for approval. There are also some platforms that charge service fees. P2P lending is an excellent choice if you’re looking for a structured repayment plan without going through traditional banks.

Government-Backed Loans

Institutions like Pag-IBIG and SSS offer loan programs to their members, and these provide many people with a reliable and regulated option for borrowing. Loans from government agencies often feature low interest rates and repayment terms of up to 2 years. They are, however, available to members only and may involve longer processing times. Government-backed loans are ideal for significant expenses such as housing or education. In fact, there are special programs dedicated to such loans.

While credit cards may offer convenience, these alternatives can provide equally effective ways to access credit tailored to your specific needs. Explore these options so that you can make informed decisions and achieve your financial goals without relying solely on traditional credit cards.