As an individual or business owner, cash flow is essential to paying bills and sustaining a business, and a disruption in that flow could result in loss and debt. 

Credit cards and alternative lending programs are means of restoring that cash flow with little to no loss. They are the alternatives to traditional banking loan systems and the red-tapism that plagues them. 

However, not enough people have the knowledge and understanding of these alternatives. On that note, here’s a complete guide to credit cards and alternative lending affiliate programs. 

What Is A Credit Card? 

In simple terms a credit card is a physical card connected to a credit account. 

On the broader scope, a credit card is a payment card used to conduct transactions with borrowed funds from the issuer or financial institution conditioned on fulfilling an obligation to repay the debt over time. 

Credit cards are essential for building your credit score as a limited credit history or credit score will affect your lending approvals, increase insurance rates, and harm your home rental chances. 

Credit cards also provide the most secure payment options and yield numerous rewards and benefits that help you earn back value on your money.

However, while credit cards are a great way to perform transactions with borrowed funds, there are other ways to do so, such as utilizing online lenders.

How Do Credit Cards Work?

There are two types of credit cards - secured and unsecured. A secure credit card requires the holder to pay a security deposit when acquiring it. There are very few secured credit cardholders, and most credit cards are unsecured. 

While it makes sense t

All credit cards operate using an annual percentage rate (APR) and credit limit. Both the APR and credit limit vary depending on the credit card. An APR is simply the yearly cost or interest of borrowing money. The credit limit is the maximum balance that is available to a cardholder on the card. 

For instance, if you apply for a credit card with a limit of $1000, this means $1000 is the maximum amount you can borrow from the card issuer until repaying all the debt accrued. Once repaid in full, the credit limit will be restored, which is why it is called a revolving line of credit.

Credit cards have a billing cycle where you are to repay the credit as outlined in the statement balance. The statement balance is the most recent documentation of the accrued debt. 

The statement balance comes with a minimum payment which is the least amount you need to pay on the card by the due date—paying the total statement balance as at when due will help you avoid interest charges on purchases and late fees from the issuer. 

Paying the credit card bill will earn points contributing to your credit score. Your credit score determines your creditworthiness and is instrumental to receiving rewards. 

What Are Alternative Lending Affiliate Programs?

Alternative lending affiliate programs render loan services to individuals or businesses who cannot obtain traditional bank loans for whatever reason. 

Alternative lending encompasses all lending services which occur outside conventional financial institutions. This includes direct private lenders, marketplace lenders, and crowdfunding platforms. 

These programs use overlooked collateral like real estate and invoices to secure loans. Though they typically charge higher interest rates, these programs offer speedy approvals, flexible terms, and streamlined processes. 

Types Of Alternative Lending Affiliate Programs

As a diverse and innovative space, alternative lending affiliate programs offer several forms of financing. The most popular types are short-term loans, installment loans, and merchant cash advances. 

Short-term loans must be paid back in a year or less. Most banks do not offer these short-term loans, so these loans are prevalent for businesses requiring working capital. 

Installment loans allow the borrower to pay back at regular intervals until they pay the entire debt.

Merchant cash advances give a business cash upfront in exchange for a percentage of the daily credit card revenue. 

Other forms of alternative lending programs include microloans, invoice factoring, and equipment financing.