Why Lines of Credit Are Perfect For The Self-Employed
The new freelance economy has changed the way many Americans work, and as a result, it’s transformed the way we pay our bills. In 2014, roughly 42 million Americans freelanced, accepting short to long term contracts with companies in order to complete single or multiple projects. With technology and near-universal Internet access making everything and everyone available, freelance professionals can work from anywhere — their home, the local café or pub, a rented office space, or even while in transit. And unlike typical 9–5 jobs, freelancers largely set their own hours as long as they meet their objectives within a specified time. The end of one contract often signifies the start of the next one.
Nevertheless, the freelance market can be a fickle thing, and sometimes one job doesn’t bridge seamlessly into the next, leaving some journalists, designers, consultants, and more without work for a few days, a few weeks, or even months. Bills and other financial obligations, however, never experience such an interruption and require full payment regardless of our pay schedules. For those who experience delays between contracts, or for those facing an unpredictable number of paid hours, it can be difficult to build a savings base needed to feel a sense of security.
A line of credit is a stress-relieving option for many Americans who find themselves between contracts. As an additional source of funds that can be accessed at any time, a line of credit provides a safety net when small to medium purchases need to be made. Typically, first-time borrowers can receive up to $500 of credit to use at their discretion, but a higher limit can be negotiated after the borrower has proved him or herself responsible and is able to repay debts on time. Many freelancers use a personal line of credit so they can go on a holiday, pay for necessary car or home repairs, or simply to make ends meet until the next contract begins. The great thing about these line of credit loans is that interest is only ever due on the money actually withdrawn from the account and not on the total amount of the credit available.
In order to find a line of credit with fair interest rates, significant research must be done. Only lenders that endorse responsible lending practices should be considered. Freelancers can investigate third-party lenders to see if they affiliate with their state’s credit bureaus, as such a partnership means the lending company is more likely a trustworthy source of funds.
As more and more Americans turn to freelance professions, more opportunities for filling in the gaps between contracts will become available. It’s tough earning a living without a secure pay date, so consider how a line of credit can add some security and stability to a turbulent world.
