Two former bankers – Neil Kadagathur and Aravind Chandrasekaran – founded London-based Creditspring in September 2018. Creditspring is a trading name of Inclusive Finance Limited and is a direct lender authorised and regulated by the Financial Conduct Authority (FCA).

Creditspring is an innovative short-term lender that offers customers a new way to deal with unexpected expenses. In return for a fixed monthly membership fee, you can borrow as much as £1,000 a year. The company’s aim is to provide consumers easy access to credit in a safe, simple, and cheaper way.

Monetisation Strategy

Creditspring generates revenues mainly from the membership fees. The costs of Creditspring Core is £6 per month while Creditspring Plus is £8 per month. There’s also a secondary revenue generator from the company’s Financial Stability Portal.

In return, you can borrow £250 or £500 on two separate occasions throughout the year at 0% interest. You only pay back what you borrow plus the monthly fee. This removes the risk of your debt spiraling because of massive interest charges.

Who Is Eligible For Creditspring?

Creditspring is limited to people who have an annual income of at least £20,000. Plus you have to be a member for 14 days before you can draw your first advance. You’ll also be subject to credit and affordability checks. The 14-day waiting period allows you to use your advances as a back-up plan for future emergencies.

The firm insists that you will never pay more than £96 over any 12 months period. But if you opt not to take out any loans, you will still pay the full membership fee of £72 per annum. The clarity offered by Creditspring is a big plus, knowing that you won’t have to pay any interest, as well as your expected repayments.

Pros and Cons of a Creditspring membership

Pros

  • The monthly fee should be comfortably manageable for most people.
  • Creditspring membership can offer you a fair degree of peace of mind.
  • You won’t lose time searching for and applying for credit when a financial emergency strikes.
  • A rise in credit score from the membership subs and the loan repayments allows you access better interest rates in the future.
  • The loans are likely to be cheaper than a similar high-cost short term loan.

Cons

  • The minimum income requirement of £20,000 p.a. may put the service out of reach of some who might benefit most.
  • The 14 days waiting period may not be an option if you need money fast.
  • If you end up not needing to borrow, you’ll still lose the membership fees.
  • Your credit score will suffer if you pay your monthly membership fee late.

The Bottom Line

Innovative lenders such as Creditspring offer an alternative to payday-style urgent loans. Although interest is 0%, the cost of credit is covered in the membership fee.

If you take out short term loans on a semi-regular manner and meet Creditspring’s eligibility criteria, then this is a viable facility. But if you don’t take out a loan during the year, then you’ve effectively paid an interest rate of infinity percent.

By Jeff Mwaura, Jeff is Kenyan based freelance writer with a focus on technology and finance.