Compared to usual bank rates of 26% to 35% for a personal loan, or to 42% or higher if you do cash advance from the same credit card.
Of course, assuming there’s a REAL need for it, like investing in a farm perhaps? Don’t just get the loan if you’re not going to use it for something productive and will bring cash inflow in the future. Don’t get loans on a whim.
The rate of 9% to 12% is almost the same as a secured loan, but here, you don’t need any collateral. And as we’ve mentioned before, don’t just pay attention to your amortization, pay attention to the interest rate!
You can get an SSS Salary Loan for 10% annually but the maximum loan is just around PHP32K.
For bank employees, the usual rate for a salary loan under your company benefits is 4% to 8% so I’d say not bad right? But not all of us are bank employees.
So probably the next best thing is through a cash loan using your credit card. Some banks call it call-for-cash, insta-cash, cash-installment-plan etc. But how?
- Be the most boring card customer they’ve ever seen. Like use your card but don’t let the card issuer earn any amount from you, no interest, no finance charges, to the point that even the annual fee is fully waived or 50% discounted.
- Maintain your card in good standing. Always pay in full, always on time. This is crucial.
- By above, I mean be a transactor. Do not just pay the minimum amount due, pay the total amount due. By doing so, the card issuer does not earn any interest from you. No finance charges for paying partially, not even a late fee or overlimit fee.
- When you avail of installments, get the 0% ones in shops (keep the tenor to a minimum by the way). Don’t convert your balances into installments with interest rate.
- The card issuer will see you as a very good customer credit-wise, but you’re not a profitable one. You do not revolve, you’re not credit hungry, etc. In short, a top tier boring customer.
- Then the card issuer will do anything it can to earn from you. That’s time they shall call you and offer you a cash loan for a really really low rate.
- They will do this so that they can earn some interest from you. And if you have an actual need for the money, then voila! That’s opportunity + preparedness = luck for you.
I used mine to buy a small farm in the province. Got the farm, title transferred, using an unsecured loan, thanks to my credit card. No need for down payment, the farm was not even used as collateral.
That’s the importance of maintaining a good credit history with your banks and card issuers.
That’s also the importance of not showing them that you can barely make your ends meet and that you don’t revolve on your credit cards, left and right, month-on-month. Doing so will mean you’re credit hungry, you’re a risky customer and banks will just offer you more credit albeit at a high rate since you’re more probable to default.
They don’t need to give you loans at low rates since you already availed of credit with high interest rates.
If you show them you don’t need a loan now and you pay your cards in full, they might just offer you a loan with very low rates, just so they can earn some amount from you.
As with all loans, be responsible in using it.