The average American household has $15,355 in credit card debt, according to a study done in 2015.
Credit card debt isn’t a big issue for some users (referred to as ‘transactors’) who pay off the balance of their cards before interest can accumulate.
‘Revolvers’, on the other hand, carry balances on their card from month to month and can eventually be overwhelmed by their debt.
Statistics from CreditCards.com show that in 2013, the total amount of revolving credit card debt in the US totaled $847 billion – “equal to the GDP of Belgium and Denmark combined!”
These numbers have been growing steadily since 1970, but have slowed down recently with the availability of credit counseling services and the growing trend towards paying off debts fast, rather than letting them accumulate.
If you want to refinance your credit card debt, there are a few ways to go about it. In this article, we’re going to focus on what’s called “peer to peer lending,” where you can obtain an unsecured low interest loan from a group online. It’s also called debt crowdfunding.
I’ll highlight a few websites to check out below!
1. Prosper
Prosper is the first American peer to peer lending website that entered the marketplace and redefined this entire industry.
Using the website, you can borrow between $2,000 and $35,000 in the form of an unsecured personal loan. The great thing about Prosper and other p2p platforms is that it’s a short application process.
But, don’t take our word for it. We interviewed a consistent borrower and brought you their experience so that you can see what other people are saying about this website.
2. Lending Club
Lending Club is the other big website out there in the peer to peer lending space. They are actually bigger than prosper in terms of loan volume.
What I like about Lending Club is their aggressive expansion into other areas of financing. For instance, they now offer business loans (up to $300k) and patient financing.
More than 50% of loans on Lending Club are used for refinancing or paying off credit cards, proving that this is a method that more people are turning to.
Similar to Prosper, Lending Club offers unsecured personal loans for up to $35k. They are also low interest, which is why it makes sense to consider this site and others in this list to pay off or consolidate your credit card debt.
In case you’re wondering, yes, we did an overview of this site too, compiling reviews from a few different sources.
3. Upstart
Finally, Upstart is another awesome option that has been gaining in popularity since its launch. You can check your rate in a few minutes and get access to funds quickly. Isn’t technology great?
Technology is the main reason that so many of these new companies have popped up. They are now able to handle a larger volume of loan applications, sync up borrowers with investors, and pass the savings on to you, hence the lower rates.
In addition, when you use Upstart or other sites mentioned in this article, you won’t suffer any pre-payment penalties. That’s always nice!
We also did a review of Upstart, going more in-depth on the specifics of the website and compiling reviews from a few different sources.
Other options
If you want to consolidate the balances of several credit cards, one option is to look for a bank that will allow you to transfer your balances onto a low interest credit card. You can use a site like LowestRates.com to check the rates in your area.
There are similar services online like Payoff, a financial services company that lets you apply for a $5,000 – $25,000 loan with lower interest rates so you can pay off cards faster.
The final option is going to a bank or credit union for a traditional loan. Most banks have online calculators that can show you how much your payments with them will be if you get a consolidation loan and you can even apply online in some cases.
These loans have become less popular in recent years because they generally have higher rates, take more time to get and may be harder to get approved for depending on your credit score.
Conclusion
Choosing to refinance your credit cards will require some lifestyle changes (like cutting up and canceling your high-interest cards), but with more refinancing options available than ever you can be debt free before you know it!
There are many tools online, like this refinance calculator, that can help you figure out if a new loan is the right option for you.
Even though crowdfunding and low interest credit card options can help you reduce your interest rates and get out of debt sooner, it is important that you do a little research to make sure the platform you choose has good reviews and you understand their terms.
