Credit card loans differ from alternative lending and P2P platforms by offering ease of access, revolving line of credit, simple money transfer options, and low interest rates. What currently tips the scale more towards credit cards is their significantly lower rates, keeping credit card companies out of harms way for so long as competing new lenders maintain their higher pricing.
According to a survey by CreditCards.com, over one third of business owners use credit cards to finance business purchases. However, credit cards still get a bad rap for being debt traps. A lot of Peer2Peer and alternative lenders have capitalized on this reputation, providing short-term loans intended to replace credit card debt. Lending Club, the largest global peer2peer lender, counts over 80 % of its loans as credit card payoffs. Do such inroads spell trouble for the credit card companies and banks? (A disclosure – While I don’t own Lending Club stock or have equity in any of the companies mentioned in this article, I personally invest in consumer loans through the Lending Club platform. Also, my company, Marc Waring Ventures, has business relationships with many of the companies mentioned in this article.)
