Drowning In Credit Card Debt? Here’s A Clever Trick!
More and more people are rushing to peer-to-peer lenders as a way to consolidate high interest credit card debt. It’s a clever trick for sure, but you need to know what to expect or how to use it.
Here’s a few helpful facts & tips:
Why People Are Consolidating Their Credit Card Debt
Credit card debt is a heavy burden to many consumers due to the fact that it’s a high interest rate loan. Sometimes up to 18% or more. By paying this off (i.e. your credit card balance) via a low interest rate personal loan, you can significantly ease your debt burden since you’ll be making lower monthly payments. Well, it used to be an easy thing to do, but lately it hasn’t been that easy BECAUSE:
Your Local Bank Won’t Easily Lend You A Personal Loan Anymore
The U.S. economy the past few years have been tight. Good luck borrowing a nice-sized personal loan in today’s economy and with less than perfect credit. Not to mention the waiting time of weeks or even months to get approved for a loan. P2P lending platforms allow you to cut thru all that redtape. It’s a much more lean & efficient machine with less overhead. Much less. No bank buildings with hundreds of employees required. It’s all done online. Not to mention, it’s much easier to be approved for a low interest rate personal loan borrow thru P2P lending platforms than thru a local bank.
“Peer-to-Peer Lending is a new financial movement that promises to solve loan issues that banks cannot – or will not – handle.”
So What The Heck Is P2P Lending?
P2P lending is an online platform that allows you to borrow from others instead of thru a bank. Pretty much anyone can become a lender as well and earn interest income thru this system. Sounds interesting but does it work? Is it legit? How about 4 Billion dollars in issued loans just in the past few years thru P2P lenders. The top P2P lender sites such as Prosper.com and LendingClub are funded not only by thousands of individual personal lenders, but also backed/funded by wealthy financial institutions like Google, etc, to offer even greater stability and safety. Many say it’s the future of online banking, and so the Big Players (like Google) are jumping on this bandwagon. So yes, it’s definitely here to stay.
Can This Make My Debt Disappear?
Let’s be dead honest. Other than filing for personal bankruptcy, nothing will make your debt disappear like magic overnight. But what this will do – if done wisely – is to help reduce your debtload as mentioned above. Lot’s of folks are doing this successfully. (But it’s probably not for everyone tho. Seriously folks, if you’re truly desperate financially and need immediate emergency assistance, then this wouldn’t be my first choice of action (see my notes below). This is for the majority of folks who do have some financial breathing room (or should I say the “luxury” of time to plan things out calmly and wisely). Not for the truly desperate who are hanging by a thread imo.).
If you’re interested in exploring this clever trick or method, then I’d definitely try it out thru one of the top P2P lenders like Prosper.com or LendingClub mentioned earlier. They’re the 2 with the kind of solid track record, the size, stability, and financial backing you want (read: the sheer number of lenders/participants who’ve invested their $$$, and the Big Financial Players who’ve invested millions into it).
**(NOTES #1 – My Deadhonest Tip/Advise if you’re in a really serious financial bind and need immediate emergency help: The very first thing I’d do is to try to work directly with your creditors to negotiate a lower payment plan. You’d be surprised how many creditors are open to help you out. (They’re not gonna bite your head off). But in case they won’t help, then you may have to go thru a nonprofit org like nfcc.org (credit counselors) and have them negotiate for you. These nonprofit outfit usually work closely with your creditors. (Heck, to begin with, these nonprofit orgs were usually set up by your creditors and/or the credit card associations in order to help you out! The logic being that your creditors will continue to receive your monthly payments even if it’s significantly reduced, as opposed to getting nothing if you filed for personal bankruptcy.).
**(NOTES #2: My Personal Rant about most of these so-called “debt consolidation services” you see out there (read: scam). They prey on people who are in a desperate financial bind. They promise to make your debt disappear by waving a magical wand (but like I mentioned earlier, nothing will do that other than filing for personal bankruptcy.). They charge you a large upfront fee and never deliver what was promised. Those type of “services” you wanna avoid like the plague.)