Lending Club is a peer to peer lending platform that lets you loan out your money and make interest on your loans. It’s a fun way to make money and let’s you be a bank in a sense for other people. If someone went to a traditional bank they may have to pay a really high interest rate for a personal line of credit. If they come to Lending Club they get to borrow your money at a lower interest rate and you get to make some profit.
I’ve been on Lending Club since 2010. I’ve loaned out about $7,000 to people over the years. Each year I made a couple of hundred dollars in interest profit. When I first started loaning people money I was more risky, lending out large amounts to one person and wanting a high interest rate. As time went on I spread my money out over many loans. Instead of giving a few hundred dollars to one person, I gave no more than $25 dollars to any one person. Instead of loaning my money out at 15% or 10% I chose to go for a lower 6% interest rate. I realized that If I was expecting people to pay a high interest rate there was a higher risk of them defaulting on the loan.
My $25 was only a small fraction of the money people would borrow. If someone wanted to consolidate their credit card debt they may borrow $12,000 and of that $12,000, only $25 of it was my money. If they default on their $12,000 loan I lost some or all of my $25.
Since I started Lending Club I made more money than I lost. I made about 6% interest a year. As you see now I only have a few hundred dollars loaned out at the moment. I am not loaning out any new money either. I’ve been slowly taking my money out of lending club to use to buy property.
I would recommend opening a Lending Club account as a teaching tool for yourself and for your children. If you’re a teacher this would be an interesting for teenagers to learn and could encourage them to save. The experience of going online every few days to loan out money and see that I had collected some profit at the same time really changed me. Loaning out money taught me to be excited about saving money. I couldn’t wait to loan out more money and see the profit come in faster
I don’t loan out money anymore as I can get higher returns with rental property. But Lending Club taught me how fun and profitable it can be to be disciplined and save money.