SafetyNet Credit was a UK-based financial service that provided a revolving line of credit to consumers seeking short-term borrowing solutions.
Unlike traditional payday loans, SafetyNet Credit offered a more flexible approach, allowing customers to access funds up to a predetermined limit as needed.
This service aimed to assist individuals facing unexpected expenses or temporary cash flow issues by providing immediate access to credit.
How SafetyNet Credit Operated
SafetyNet Credit functioned similarly to an overdraft facility.
Customers were assigned a credit limit based on their financial profile, and they could draw funds up to this limit at any time.
Interest was charged daily on the outstanding balance, and repayments were automatically adjusted based on the customer’s bank account activity.
This system was designed to offer convenience and flexibility, enabling borrowers to manage their finances more effectively.
Interest Rates and Fees
SafetyNet Credit charged a daily interest rate of 0.8% on the borrowed amount, capped at 40 days.
For example, borrowing £100 would incur an interest charge of 80 pence per day, with a maximum total interest of £32 over the 40-day period.
There were no additional fees or hidden charges, making the cost structure straightforward.
However, it’s important to note that while this rate was lower than some payday loans, it was still higher than traditional personal loans or credit cards.
Eligibility Criteria
To qualify for a SafetyNet Credit line, applicants needed to meet certain criteria:
- Be a UK resident aged 18 or over.
- Have a regular income of at least £500 per month.
- Possess a UK bank account with online banking facilities.
SafetyNet Credit utilised open banking technology to assess applicants’ financial situations, allowing them to make informed lending decisions based on real-time data.
Advantages of SafetyNet Credit
- Flexibility: Borrowers could access funds as needed, up to their credit limit, without reapplying for a new loan each time.
- Transparency: The absence of hidden fees meant customers were aware of the costs involved.
- Automated Repayments: SafetyNet Credit’s system automatically adjusted repayments based on the customer’s bank balance, helping to prevent missed payments.
Considerations
While SafetyNet Credit offered several benefits, potential borrowers needed to consider the following:
- Cost: The daily interest rate, though lower than some alternatives, could accumulate over time, making it an expensive option for long-term borrowing.
- Bank Account Monitoring: SafetyNet Credit required access to customers’ bank account data to operate effectively, which might have raised privacy concerns for some individuals.
Closure and Administration
In January 2023, SafetyNet Credit’s parent company, Indigo Michael Limited, entered administration.
This development led to the cessation of new lending activities under the SafetyNet Credit brand.
Existing customers were advised to continue repaying their outstanding balances as per their original agreements.
The administrators communicated with customers regarding the status of their accounts and any further actions required.
Alternative Options
With SafetyNet Credit no longer operating, individuals seeking similar flexible credit solutions might consider other providers.
It’s essential to compare different options, focusing on interest rates, fees, and terms to ensure the chosen product aligns with one’s financial needs and repayment capabilities.
Responsible Borrowing
Regardless of the lender, responsible borrowing is crucial.
Potential borrowers should assess their financial situation, ensure they can meet repayment obligations, and avoid borrowing more than necessary.
Utilising budgeting tools and seeking financial advice can aid in making informed decisions.
Conclusion
SafetyNet Credit provided a flexible borrowing option for UK consumers through its revolving credit facility.
While it offered several advantages, including flexibility and transparency, the service ceased operations following the administration of its parent company in early 2023.
Individuals seeking similar financial products should explore alternative options, ensuring they choose solutions that best fit their financial circumstances and borrowing needs.
