Non-traditional loans incur very high interest rates as anyone who has needed to use this option will mention. Still this is a viable option for those who cannot qualify for bank loans that carry lower rates. Many lenders have introduced rewards programs for frequent borrowers in an effort to relieve some of that burden. Programs are free to join and typically consist of three or four tiers.
These will differ among lenders but tend to follow similar formats and qualifications. Once the initial loan is paid back on time and in full, referred to as a successful loan, borrowers can sign up for the program and participate in the first tier. Two more loans need to be completed at that first tier before moving on to the next tier. Depending on the lender, a tier may require two or three successful loans before moving up a tier.
What are the Rewards?
At each tier reached, the interest rates become slightly lower than the previous tier. This can save frequent borrowers a substantial amount of money with every successful loan completion. Rewards do not stop at the interest rates. The amount of money that can be borrowed increases with each tier. Terms for paying back the loan increase as well making repayment easier and less of a burden on the budget.
A Detailed Example
The Club Blue program is offered by Blue Trust Loans. The first tier, the blue tier, allows people to borrow up to $1,450 for 180 days at an interest rate of $24.50 for every $100 borrowed. After one successful loan, borrowers move to the silver tier. After two successful loans at that level, the gold tier is attained. The final tier, platinum, allows borrowers to borrow up to $2,000 for 300 days at an interest rate of $16.00 per $100 borrowed.
A rewards program is no substitute for improving money management skills and learning how to establish and stay within a budget. It can be a money-saving tool used during the ongoing process of being responsible with money and balancing income and expenses. In times of unpredictable economics, rising prices on all essential items and services, and people being out of work due to store closings and factories moving out of the country, it may take some time before the average person can afford to balance a budget.