Lending Club Blog

Credit Card Problems Get Top Billing

With all of the other newsworthy events happening each day in the world, you probably wouldn’t expect an article about credit card fees to be the lead story on a major news website. But that’s exactly what happened on the afternoon of Thursday, September 20th. MSNBC.com featured an article on credit card rates by Herb Weisbaum as the top news story of the day. The full article can be found here.

In the article, Mr. Weisbaum brings up many interesting facts about credit cards that warrant being recapped here:

    • Despite its pledge to take on the credit card industry six months ago, Congress has yet to act to reduce or limit the high fees and penalty interest rates

    • At a time when they should be reducing fees and rates, many card issuers are increasing late fees, cash advance fees, and default fees (see this GAO study for more information)

    • Some cards have added a third tier to their fee structures. Instead of charging one late fee for balances below a certain amount and another for balances above that amount, by having three levels, higher fees can be charged with lower outstanding balances

    • Even though the recent, and much publicized, half-point rate cut of the Federal Reserve will eventually find its way to consumers with variable rate credit cards, card issues tend to reduce rates more slowly than they raise rates

    • The Federal Reserve rate cut will have little or no impact on penalty rates and fees

The rest of the article goes on to describe why credit card cash advances are such a bad idea for the consumer. Examples were given of a card that charges an interest rate over 28% for cash advances on its standard accounts. Taking money out at that rate was reported to cost $465 in interest and fees over the course of a year for an advance of $1,500.

While tapping into savings or applying for a Home Equity Line of Credit (HELOC) are both suggested as cash advance alternatives, another viable choice was not discussed: Lending Club P2P loans are a favorite choice of people in need of cash who wish to avoid the incredibly high interest and fees of credit card cash advances. With rates comparable to a HELOC, without the need to time up the equity in your home, Lending Club may be the best solution for your cash funding needs.

Mr. Weisbaum concluded his excellent article by urging consumers to write to their representatives in Congress and urge them to make changes to credit card regulation. The fees and interest charges common to the credit card industry have certainly gotten out of control.

Wednesday, September 26th, 2007 at 7:17 am

Comments (0)


Welcome Home

Lending Club named #5 on Forbes’ Most Promising Companies List

Get ready for tax season with Lending Club’s Tax Form Guide

New Adjusted Return Metric

See more
Lending Club Awards
  • Archives z

Recent Posts

Credit Performance Update

Summary: Credit performance of our standard program is coming… Read More »
February 7, 2016

New Infographic on Small Business Financing

Check out our latest infographic on the state of… Read More »
December 17, 2015

More Data Coming for Investors

We’re always seeking feedback and looking to make the… Read More »
November 10, 2015

Lending Club Surpasses $13 Billion

Check out our updated infographic to see what a… Read More »
October 29, 2015

Lending Club Launches Multi-Draw Line of Credit for Small Businesses

We’re excited to announce the… Read More »
October 16, 2015

Bloomberg Markets Names Renaud Laplanche on its 2015 “Most Influential” List

Read More »
October 6, 2015

Congratulations, Carrie! Named 2015 Financial Woman of the Year by The Financial Women of San Francisco

Read More »
October 5, 2015

Congratulations to Carrie Dolan – Named one of American Banker’s 2015 Most Powerful Women in Finance

Read More »
September 22, 2015

Welcome Nebraska, Kansas, and Indiana Investors!

We recently welcomed residents of Nebraska, Kansas, and Indiana… Read More »
September 21, 2015

Lending Club Job Spotlight: Technology & Member Support

Our Technology team develops and… Read More »
September 14, 2015


We went public today!

Ringing the bell this morning at the New York… Read More »
December 11, 2014

New and Improved Statistics Page

We recently redesigned our Loan Statistics page to make… Read More »
November 13, 2014

Lending Club Honored with Economist Innovation Award

This month I was honored… Read More »
October 15, 2014

Welcome Vermont Investors!

Today, we’re thrilled to welcome residents of the state… Read More »
September 4, 2014

We filed to go public today

We filed a registration statement with the SEC today… Read More »
August 27, 2014

Our Billion Dollar Quarter

We’re excited to announce  that we’ve facilitated over $5… Read More »
July 8, 2014

Is Lending Club Available in My State?

Is Lending Club available in my state? That is… Read More »
July 7, 2014

Lending Club Joins Senator Cory Booker to Discuss Improving Access to Capital for Small Businesses

Read More »
June 20, 2014

Lending Club Named a CNBC Top 50 Disruptor for a Second Year

For the second year in… Read More »
June 17, 2014

PRIME is now Automated Investing

Lending Club is excited to announce that PRIME has… Read More »
May 14, 2014
View All w