With the advancement of payment systems, you might have found it a bit messy to manage multiple credit/debit cards together. All thanks to Cred with which you can smoothly manage multiple cards, track expenses, and get exclusive discounts. Cred has multiple products among which CRED Mint is stealing the limelight! How? You may ask. Due to its amazing features. But is it safe to use? Is it better than the 12% club? How does it work? You will get answers to all such questions in this article.
Note: We have already explained the CRED business model. You can refer to it for further details.
What is CRED Mint?
CRED launched a product called “CRED Mint.” If you are an eligible member then you can earn up to 9% interest per annum by lending your idle money to other CRED members. Quite interesting! Isn’t it? Also, you can apply for early access to join the platform in partnership with Liquiloans and earn returns of up to 9%. It is a kind of P2P (Peer-to-Peer) lending where you can lend money to other trusted members while earning interest at the same time. Do you know you can earn interest as high as Rs.100000?
When it comes to lending, credit score is a significant factor in CRED Mint. Here, you can lend the money only to those CRED members who have a credit score above 730. Because people with high probability scores are more likely to return the money on a timely basis. However, you must note an important point that the return rate is not guaranteed nor fixed like the fixed deposits of banks. But on the flip side, you won’t have to pay any premature withdrawal charges, unlike other financial instruments (like FD).
How does CRED Mint work?
As you know, peer-to-peer platforms bring together borrowers and lenders. But CRED Mint focuses more on the lending part of this P2P transaction. You may see it as an investment because according to this product, you will get an impressive return through it.
CRED Mint works in the following ways-
1. Registration of the user
To use CRED Mint, you need to be a regular user of CRED. Thereafter, you have to register yourself on CRED Mint and verify your eligibility. Being a registered member, you can lend or rather invest INR 1 lakh to 10 lakhs on this product. You can check the amount of money (value of investment) on the CRED app.
2. Money lending
Here, the money you invested is held in an escrow account with a trustee promoted by the bank. (Note: Escrow is a legal arrangement where a third party holds the money temporarily until you fulfill a particular condition). The investment you make on CRED Mint is lent out in the form of CRED Cash. It is distributed among the borrowers as per the auto-invest criteria chosen by the lender. While lending, you can check the portfolio of the borrowers. Also, you can seek other related information from the borrower. But for this, you need to place a real-time request to CRED.
3. Splitting the lent money among borrowers
Once you invest the money in it for lending, then CRED would split it over 200 borrowers having 730+ credit scores. However, you won’t be the only lender here. There will be numerous lenders like you. The high credit quality of borrowers along with the diversification will mitigate the risks for you.
CRED Mint Review
We will review CRED Mint based on its features, benefits, and risks to give you a clear picture.
|Earn a higher interest rate (9%)||High-interest rate||Interest rates not guaranteed|
|Track your lent money||Diversification of lent money over 200 borrowers||High minimum investment value i.e. Rs.1 lakh|
|The investment limit is 1 lakh to 10 lakhs||Liquidity (withdraw money whenever you want)||No tax benefits (tax applicable on returns)|
|Any time cash withdrawal without any extra charges.||Transparency and tracking||High risks and uninsured lending|
|Taxation as per your income tax slab.||Access to credit and an easy loan application process.||Less awareness|
Feedback from users so far
Till now, the feedback from users on CRED Mint is quite vague. Some of them claim that the data on the number of beneficiaries was not visible on their official website. Also, they are preferring other platforms like BharatPe’s 12% club or Mobikwik Xtra which allows investors to earn returns of up to 12%. We will throw a comparison between CRED Mint and the 12% club in the upcoming sections. However, the investment tracking feature is highly admired by users. This combats the risks of investments to a greater extent.
CRED Mint vs. 12% Club
This is the most anticipated comparison among the folks. Both the fintech products claim to be perfect for digitally savvy customers. But which one is better for you? You can figure it out through this table.
|Distinct Features||CRED Mint||12% Club BharatPe|
|Type of Lending||Peer to peer||Peer to peer|
|Interest Rate Earned||9%||12%|
|Merchant Data||Not available||Available|
|Referral Program||No benefits for referrals||Handful benefits for referrals|
|Minimum Investment||INR 1 Lakhs||INR 1000|
|Partners||Liquiloans||Hindon Mercantile Limited|
LendenClub (Innofin Solutions Private Limited)
LiquiLoans (NDX P2P Private Limited)
|Risks||Comparatively high (due to high minimum investment)||Comparatively low (due to low minimum investment and high returns)|
The risk section is quite complicated in both the fintech products. Let me explain it in simple words. In CRED Mint, you will get only 9% interest rate on your lent money (investments) but it has a massive minimum investment amount i.e. Rs.1 lakh. Also, it lacks sufficient merchant data. On the contrary, you will get an impressive 12% interest rate on your investments with a minimum investment amount of Rs.1000 only. Here, you will get sufficient merchant data too. However, you can track where your lent money goes and get information about your borrowers in CRED Mint. This feature is not available in 12% Bharatpe.
So, now it is your turn to decide what you want. A good tracking feature with high investment value or higher returns with good merchant data and affordable investment amount.
If you want the former one, then go for CRED Mint. Otherwise, for the latter one, you can use the 12% Club of BharatPe.
Note: We have explained the 12% club of BharatPe. You can look into it for more details.
Is CRED Mint safe?
Although you will get impressive returns in CRED Mint. But the safety of CRED Mint is a big question mark! You will not get any security to recover any loss. To combat this risk, CRED Mint has reduced exposure to bad borrowers. By bad borrowers, we mean the ones having poor credit scores. Also, the amount you invest in CRED Mint will be a part of the CRED Cash Program. This is traceable!
Eligibility Criteria of Borrowers
Borrowers need to qualify the following threshold to borrow money on this fintech product-
- High credit scores
- Low net default rates
- Solid credit history
- Track record of on-time payments
But what if there is a loss?
Although the diversification of investment amount across 200 borrowers minimizes the default risk of the loss on your portfolio closer to the average of 1%. In case the losses cross the threshold, the variable fee model allows the product to withstand up to 4X of historical defaults. It ensures that the investors must be repaid. The CRED and Liquiloans commission depend on the portfolio performance. (Note: Liquiloans is an RBI-regulated NBFC that powers CRED Mint).
Final Words: Should you invest in CRED Mint or not?
Now we are at the final part of your queries. Should you invest in it or not? Although it is completely your decision. But you must know the following information before reaching a conclusion.
- The returns on CRED Mint investment (lending) are taxable according to the slab rate of the investor’s income.
- Requires high minimum investment.
- No guarantee of returns
- Prone to defaults by borrowers
So, we cannot call it completely safe. But if circumstances are in your favor, then in spite of risks you will earn good returns on your investments in CRED Mint.