Marketplace lending sites have quickly capitalized on one segment of personal debt: Credit Cards. Yes, just about everyone holds and uses credit cards for day to day purchases. If you are savvy, you pay them off at the end of each month. But at times that intent to pay gets rolled over in the next month, and perhaps another. And why is that? It is easy as credit card issuers are willing to provide credit on purchases over an extended period of time. The credit card issuers are killing it too. Check out that interest rate you are paying and then look up usury in the dictionary. There should be a logo of your favorite credit card company right next to the definition.
Prosper, one of the leading platforms in the P2P/Marketplace lending space in the US, recently did a survey on credit card debt. Their revelations should come as no surprise:
- 19.5% of respondents saying it’s higher stress than their jobs and 9.9 percent of people saying it’s more stressful than personal health issues.
- 13.7% of people have no plan for tackling credit card debt.
- Only about half of credit card holders pay their balance in full.
- 30.2% of people said they would never get a credit card again if it meant they could be absolved of credit card debt.
Credit card debt is bad news. If you get stuck in the vortex of credit card payments there are few options to get out. Marketplace lending platforms have capitalized on this disparity. Be creating an option to the companies providing the credit, platforms like Prosper have been able to thrive.
On average an American household carries over $15,000 of credit card debt. Total household indebtedness stood at over $11 trillion dollars as of this past June according to the Federal Reserve Bank of New York. This represents an incredible opportunity for direct lenders. Marketplace lending has capitalized on their ability to undercut banks while generating a solid profit for their investors. Consumers win (mostly). Credit card companies, not so much.
