SAN FRANCISCO—Another player has entered the lending market.
SimplyCredit, a financial technology startup, said it has raised $1.5 million to build what it said is a new credit product that allows consumers to refinance their existing credit card debt at lower rates using a one-stop payment management platform.
According to the company, SimplyCredit customers will be issued a new line of credit at simple interest to pay off existing and newly occurring credit card balances. Through the payment platform, SimplyCredit said it will make monthly payments directly to credit card companies on behalf of their customers, consolidating balances into a single revolving line at one low interest rate.
“Customers in turn make a single monthly payment to SimplyCredit and the revolving line,” the company said. “SimplyCredit's customers retain all of the conveniences and rewards their credit cards provide while avoiding the fees and complicated – even predatory – terms.”
The company said its key features include no fees of any kind, no penalty pricing and simple interest rates (versus the industry-standard compounding interest).
"The credit card companies' only real innovations over the last few decades have been around finding ways to make more money from consumers," says Karthik Sethuraman, co-founder and CEO of SimplyCredit. "Credit card companies have mastered the art of keeping people in debt forever. Conventional wisdom says that you have to take out a personal loan and cut up your cards, which just doesn't work in practice. That's why we are introducing a new product that not only offers lower rates with fair and transparent terms, but is squarely aimed at helping consumers break free from their onerous credit card obligations without giving up their cards."
SimplyCredit said it will initially focus on consumers with good credit scores to start, but those with less than stellar credit will still be able to get access to the payment platform. For these customers, SimplyCredit said it will optimize their credit card payments using an algorithm designed to minimize interest charges and improve credit scores.