How to Refinance Credit Card Debt with Peer to Peer Loans

In 2010, the consumer debt in America was placed at $2.4 trillion while in 2011; it was 11.38 trillion showing a significant drop by 2.95 percent. Credit cards take the largest proportion of consumer debts in US and this means that consumers need to know how they can manage these debts. Credit cards are essential financial tools but when used inappropriately, or due to unavoidable circumstance, these cards can bring a stack of debts and financial pitfalls that may be challenging to cope with.

Before you declare bankruptcy, there are a number of things you need to work around to determine credit card debt solutions. The road to eliminating the debt may not be smooth but altogether there is hope. You can get out of your credit card within a few years and be financially freed of those debts. Credit card debts are known to pile up so fast and one thing is because the interest rates charged on balances increase with great magnitudes.

For example, if you miss a payment, the interest rates may increase from the average 16 percent to about 31 percent or so. It most cases, just one late payment can attract an increase of 15 percent APR on the balance. There are people servicing credit card balances with interest rates as high as 35 percent.

However, you do not have to go through these challenges as there are different ways you can refinance your debt. Refinancing is simply acquiring another loan that has low interest rates and doing away with the older high interest loan. This can be achieved through credit card debt transfer, home equity loans, home equity line of credit, personal loans and peer to peer loans.

The peer to peer loans have lower interest rates, meaning that they can be used to refinance your existing high-interest credit card debt. However, for you to obtain these loans, you should have a good credit score. If you have a credit score of more than 660 points, you can apply for a p2p loan that attracts a rate of between 6 and 10 percent APR. Considering that credit card debt may attract interest rates of more than 25 percent, it means that when you switch it to peer to peer loan, you can be able to clear your debt comfortably.

And as InCharge Debt Solutions’ director of education and creative programs Karen Carlson points out, peer to peer lending can offer a viable alternative for borrowers who have been turned away from banks and other conventional lending institutions. InCharge Debt Solutions is a nonprofit credit counseling agency. 

Peer to peer loans are obtained online and they are offered by companies such as Lending Club and Prosper. These two companies are the pioneers of the peer to peer lending and today, they have recorded an enormous growth. Recently Lending Club reached a record high of $1 billion in loan originations or the loans issued and this shows that the market is growing strong.

You can contact a peer to peer lending partner and get a low interest rate loan to pay off your debt. Most of the p2p loans carry a term of between 12 to 30 months. In addition, you can get a loan of up to $35,000 which can allow you to settle the debt easily. Usually, when you are refinancing, you are just changing or switching your loan to a low interest credit. It means that you acquire a new loan under different terms and conditions that allows you to settle it more comfortably than the previous one.