I am a client of Lending Club. Lending Club and its main competitor, Prosper, facilitate peer-to-peer lending. They offer slick online platforms that make it easy for me to lend money to another person living in the US. For example, I could invest in loans which will be used by the borrower to pay off their credit card bills. In exchange, I receive an interest rate on the loan which is much higher than I even get on a high-yield bond. On average, the loans that I make through Lending Club have a 16% rate of interest. While a larger percentage of the people that I loan money too will not fully pay it back, I expect the returns to be about 9% per year after deducting loan losses. (Learn more about P2P Lending here.)
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