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A personal loan and credit card can be important financial tools, but it's important to understand how they each work before deciding which one to use. 

When deciding between a <a href="https://www.lendingclub.com/personal-loan">personal loan</a> or a credit card, it’s important to weigh their key differences, how you plan to use the funds, and your personal financial situation. A credit card may make sense for smaller purchases, like groceries, gas, or your morning coffee. As long as you’re confident you can pay off the total balance at the end of the month, using a credit card can be a good option. However, if you’re looking to finance a larger purchase, like a home remodeling project, a personal loan can help you access the funds you need with a fixed interest rate and repayment plan.[1][2] <h2>Differences between personal loans and credit cards </h2>A personal loan is a lump sum of money that’s paid back over a predetermined period of time, while credit cards offer a line of credit that accrues a balance and requires a monthly minimum repayment. Here’s a closer look at how personal loans and credit cards compare.[1][2] <h3>At a glance: The differences between personal loans and credit cards</h3><table><tr><th></th><th>Personal Loan</th><th>Credit Card</th></tr><tr><td>What is it:</td><td>A lump sum of money that’s repaid in monthly installments over a set period of time with interest  </td><td>Payment card used for charges against a revolving line of credit with accruing balances that’s repaid with a minimum monthly payment </td></tr><tr><td>When to use:</td><td>Consolidate high-interest debt or pay for one-time major expenses like weddings, vacations, or home improvements </td><td>Cover day-to-day expenses or unexpected needs without cash or checks </td></tr><tr><td>Best for...</td><td>Access to quick funds with fixed interest rates and predictable monthly payments </td><td>Access to revolving credit for small purchases or emergencies </td></tr><tr><td>Interest rate type </td><td>Fixed rate for life of the loan </td><td>Variable rate on unpaid balance </td></tr><tr><td>Repayment type </td><td>Fixed monthly installment </td><td>Monthly payment based on current balance  </td></tr><tr><td>Advantages </td><td>Larger borrowing limits; lower interest rates than most credit cards; predictable repayment plan; can help build and improve credit </td><td>Convenience; no interest due if total monthly balance paid in full; earn rewards or cash back on purchases </td></tr><tr><td>Disadvantages </td><td>Loan repayment starts immediately; some lenders may require an origination fee or prepayment penalty </td><td>High, variable interest rates; credit limits can vary; potential for high-cost debt to accumulate quickly; possible annual and late fees; can quickly damage credit if used irresponsibly  </td></tr></table><h2>Personal loans </h2>A <a href="https://www.lendingclub.com/resource-center/personal-loan/guide-to-choosing-the-best-personal-loans">personal loan is a lump sum of money</a> you can borrow for almost any purpose, such as <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-consolidation">consolidating credit card or other debt</a>, paying moving costs, or making home improvements. With a personal loan, your interest rate is typically fixed and lower than most credit card interest rates, and you’ll have a set amount of time to pay the loan back. Personal loans can be an effective financing choice in many situations—including those that involve larger cash sums that you want to pay off over time.[1][2] Here are some common reasons to choose a personal loan:  <ul><li>You want to consolidate credit card debt. Credit cards tend to charge higher interest rates compared to other borrowing options. Using a personal loan to pay off higher-interest debt lets you fold multiple payments into one manageable payment with a more favorable interest rate and term, which can save you money.[3] </li><li>You need a large amount of money. Generally, a personal loan gives you flexible access to more cash than a credit card does, without the drawback of racking up high interest on large purchases that can’t be paid off within a month or two. With a fixed and typically lower interest rate, personal loans can be used to make major purchases, handle big expenses, or fund important goals. </li><li>You prefer more control over your cash. Personal loans offer added flexibility when it comes to accessing and disbursing your money. Because funds are usually deposited directly into your bank account within days, you can decide when and how to fill a short-term cash need for an emergency or invest in a big purchase, managing your priorities as necessary. </li></ul><h3>Personal loan pros and cons </h3>Before taking out a personal loan, it’s important to weigh the pros and cons. Here’s a breakdown of some of the key advantages and disadvantages of using a personal loan.[1]    Pros: <ul><li>Large borrowing limits </li><li>Lower interest rate than most credit cards </li><li>Predictable repayment plan with fixed interest rate and monthly payment amount </li><li>Swift application and disbursement of funds </li><li>Positively impacts credit score with on-time payments </li></ul>Cons: <ul><li>Loan repayment starts immediately </li><li>Required, fixed payments with interest </li><li>People with less-than-perfect credit may not qualify for the best rates or terms </li><li>Possible <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-a-personal-loan-origination-fee">origination fee</a>, prepayment penalty, or late fees </li><li>While not common, collateral may be required for secured loans </li></ul><h3>Who a personal loan is best for  </h3>A <a href="https://www.lendingclub.com/resource-center/personal-loan/how-do-loans-work">personal loan</a> is best for people looking to borrow a large sum of money and pay it back over time. Consider a personal loan if you need to consolidate other debt, like high-interest credit cards, into one easy-to-manage monthly payment—often with a lower interest rate. A personal loan might also be best if you need to finance a large, one-time expense like a wedding, dream vacation, or home repairs.[1] [3]   Personal loans must be paid back with fixed monthly installments, so they’re a good option if you like to plan your monthly expenses upfront. People with excellent credit generally qualify for the best rates, highest loan amounts, and most flexible repayment terms. So personal loans may be a good choice if your credit is excellent. If you’re working on rebuilding your credit, consider waiting to apply until your credit improves—or ask a creditworthy family member or friend to be a co-borrower.[1]   <h2>Credit cards </h2>Credit cards are convenient financial tools for most people—in fact, <a href="https://www.federalreserve.gov/publications/files/2023-report-economic-well-being-us-households-202405.pdf">according to the Federal </a><a href="https://www.federalreserve.gov/publications/files/2023-report-economic-well-being-us-households-202405.pdf">Reserve</a>, 82% of us have at least one. While credit cards can help pay everyday expenses, finance purchases, and build credit history, those perks can come with costs—especially if you struggle to manage credit wisely. When compared to personal loans, credit cards are more often used for smaller purchases and come with higher interest rates.   <h3>Common reasons to choose a credit card include:   </h3><ul><li>You want a reliable way to pay for important purchases. When you pay for something with a credit card, you&#39;re often protected against damage, theft, or loss of the item for as long as 90 to 120 days after the purchase. Known as <a href="https://www.experian.com/blogs/ask-experian/what-is-credit-card-purchase-protection/">purchase protection</a>, this credit card benefit is kind of like short-term insurance for products you buy. </li><li>You want to take advantage of rewards programs. Many of the best credit cards offer perks like cash back, discounts, points, or miles on all purchases, letting you maximize rewards and save money simply by paying with your card. For example, you could use a card that offers the best grocery bonuses to do all your food shopping, earning free cash for regular purchases.[4]  </li><li>You want a backup plan. Credit cards give you the option to safely pay without cash, checks, or debit cards. And having a card on hand can give you peace of mind should you need it—even if you reserve it purely for emergencies.    </li></ul><h3>Pros and cons of credit cards </h3>Before using a credit card, it’s important to understand the pros and cons. Here are some key advantages and disadvantages of using credit cards.   Pros: <ul><li>Purchase and fraud protection </li><li>Widely accepted form of payment  </li><li>No interest when monthly balance is paid in full </li><li>Options for rewards, discounts, or cash back on purchases </li><li>Responsible use can build positive credit history </li></ul>Cons: <ul><li>Credit limits and interest rates can vary </li><li>Possible annual fees and late fees </li><li>Research needed to choose the best credit cards </li><li>Potential for high-cost credit card debt to accumulate </li><li>Credit score damage if used irresponsibly </li></ul><h3>Who a credit card is best for </h3>Credit cards are a good option for people looking for a convenient, secure way to pay for everyday purchases. Consider a credit card if you need to make several smaller purchases. Credit cards are also handy in an emergency if you need to cover unexpected expenses like car repairs, broken appliances, or medical costs.   A credit card may also be a good choice if you want to earn rewards for your spending on everyday purchases like gas, dining, or groceries. To avoid <a href="https://www.lendingclub.com/resource-center/personal-loan/apr-vs-interest-rate-whats-the-difference">paying interest</a>, credit cards are best for people who don’t carry a balance from month to month. People building (or rebuilding) credit may also benefit from using a credit card, but only when used responsibly.[2][4] <h2>Do personal loans and credit cards affect your credit score differently? </h2>When you apply for a personal loan or credit card, the lender will perform a hard inquiry into your credit history. This usually makes your credit score drop by a few points. However, the effect is temporary and your score typically bounces back in just a few months.[5]   Once you have a personal loan or credit card, be sure to pay your bills on time. Your payment history is reported to the credit bureaus and plays a major role in <a href="https://www.lendingclub.com/resource-center/personal-finance/what-affects-your-credit-score">determining your credit score</a>. A positive payment history can help keep your credit on track, and even help boost your score, while a negative payment history can cause your score to drop. Defaulting on your loan or failing to pay a credit card could have serious consequences that affect your score for up to seven years.[6]   Using a credit card responsibly can also help give your score a boost, but it’s important to keep an eye on your credit utilization. Keeping your card balance under 30% of its credit limit typically keeps your credit healthy. In other words, don’t max out your cards, and pay your balance in full each month if you’re able to.[6]   <h2>The bottom line </h2>There’s a lot to think about when you’re evaluating pros and cons of a personal loan versus a credit card. Before you choose, you’ll want to consider how much money you need and how quickly you can pay it off. Then compare interest rates and fees, and weigh the overall cost of each borrowing option. Research credit cards that meet your needs, or compare online lenders for the most competitively priced personal loan you can afford. To avoid an initial hit to your credit, look for lenders like LendingClub Bank that let you check your rate with just a soft credit pull. <hr/><ol><li> <a href="https://www.consumerfinance.gov/ask-cfpb/what-is-a-personal-installment-loan-en-2114/">Consumer Financial Protection Bureau</a>. “What is a personal installment loan?” </li><li><a href="https://www.consumerfinance.gov/ask-cfpb/how-does-my-credit-card-company-calculate-the-amount-of-interest-i-owe-en-51/">Consumer Financial Protection Bureau</a>. “How does my credit card company calculate the amount of interest I owe?” </li><li><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-credit-counseling-and-debt-settlement-debt-consolidation-or-credit-repair-en-1449/">Consumer Financial Protection Bureau</a>. “What is the difference between credit counseling and debt settlement, debt consolidation, or credit repair?” </li><li><a href="https://www.consumerfinance.gov/data-research/research-reports/issue-spotlight-credit-card-rewards/">Consumer Financial Protection Bureau</a>. “Credit Card Rewards” </li><li><a href="https://www.experian.com/blogs/ask-experian/hard-inquiry-vs-soft-inquiry/#:~:text=Hard%20inquiries%20can%20impact%20your,for%20less%20than%20a%20year.">Experian</a>. “What’s the Difference Between a Hard and Soft Inquiry?”  </li><li><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score">myFICO</a>. “What&#39;s in my FICO Scores?”  </li></ol>

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any accumulated interest. Due to the interest-on-interest effect, compound interest grows faster over time.

Whether you’re saving or borrowing money, you should understand the difference between simple interest and compound interest. Why? Because these rates are commonly used for loans, credit cards, and savings accounts—but they’re calculated differently. In other words, it impacts how much you’re paying (or earning). <h2>What is simple interest? </h2>Simple interest is the interest calculated on the principal amount of a loan.  For example, if you open a $10,000 certificate of deposit (CD) with a 3% interest rate and simple interest, the CD will accrue $300 of interest every year ($10,000 x 3% = $300). If it has a three-year term, you’ll earn $900 of interest overall.  With a loan, the simple interest can determine how much you’ll pay. However, the total amount can be a little difficult to calculate because your principal balance will decrease as you repay the loan. <h3>How to calculate simple interest </h3>Simple interest depends on the principal balance, interest rate, and time period. Here is the simple interest formula: I = P*r*t <ul><li>I is the total interest amount </li><li>P is the principal balance </li><li>r is the interest rate </li><li>t is the time period </li></ul>You want to use the same timeframe for the inputs to ensure you get the correct results. For example, if interest is charged daily, use the daily interest rate for (r) and a single day for (t) to determine how much interest accrues each day. If you want to figure out how much interest you’ll pay each year, use the annual interest rate and one year as the time. You can often review a loan agreement or statement to find the loan’s interest rate. It may be shown as the annual rate, but the loan agreement could explain how a daily rate is determined. Often, the annual interest rate will be divided by either 360 or 365 to determine the daily interest rate. <h2>What is compound interest? </h2>Compound interest applies the interest rate to both the principal balance and accrued interest. In other words, it charges interest on interest. With a loan, compound interest can lead to paying more interest over time. For example, a credit card may use daily compounding interest if you’re carrying a balance. Each day, interest is calculated based on your current total owed and your card’s daily interest rate and then. added to your balance. On the following day, interest is calculated again on your new balance, and the cycle continues. With savings, compound interest can be a good tool to build wealth over time. Because you can earn interest on your interest, your account may grow more quickly. Checking and savings accounts often show you the account’s annual percentage yield (APY), which includes compounding interest in the calculation. <h3>How to calculate compound interest </h3>Calculating compound interest can be tricky because there’s an additional variable. That is the frequency of compounding. We’ll use an example to explain this concept below. This is the compound interest formula: A = P (1 + r/n)nt <ul><li>A is the total amount </li><li>P is the principal balance </li><li>r is the annual interest rate </li><li>n is how often interest compounds per year </li><li>t the number of years </li></ul>If you only want to find the total accumulated interest, you could use:  I = P (1 + r/n)nt - P  For example, let’s say you take out the same $10,000 CD with a 3% interest rate and three-year term. But this time, the interest compounds monthly. A = 10,000 (1+.03/12)(12*3) = $10,940.51 You earned $940.51 in interest—an additional $40.51 compared to the simple interest CD—because you earned interest on your interest. The frequency of compounding can also be important, as you’d earn more if interest compounded daily, but less if it compounded annually. You can find out how frequently interest is compounded for your account by reviewing your terms. <h2>Simple interest vs. compound interest loans </h2>Compound interest is often best when you’re saving money because you’ll earn interest on interest. If you’re taking out a loan, a simple interest loan may be the better option since it could lead to less costs overall. However, even with a simple interest loan, there are situations when your outstanding interest could be “capitalized,” or added to the principal. For example, this could happen when certain federal student loans leave deferment or forbearance. The interest rate would then apply to the new, larger principal balance.  Remember, it’s important to look beyond the interest methods and consider the rest of the loan terms, such as the fees and repayment terms. If you have a tight budget, it might make sense to go with an option that has a lower monthly payment, even if it results in paying more interest overall. <h2>How simple interest personal loans could save you money </h2>Assuming all other loan terms are the same, a loan that uses simple interest could have lower monthly payments and cost you less overall than a loan using compound interest. You may be able to save additional money by making extra payments. By paying down part of your principal early, you can decrease how much interest accrues on your loan, With a fully amortized loan, your monthly payment amount might not change because you have a fixed repayment schedule—but making early payments could lead to paying off the loan early or having a lower final payment. Saving money by making extra payments can work with both simple and compound-interest loans, but it’s not true of loans that use precomputed interest. With precomputed interest, the lender calculates and adds the interest to your loan. <h2>The bottom line </h2>Loans and deposit accounts may use simple or compound interest to determine how interest accumulates. When an account uses simple interest, the interest rate only applies to the principal balance. But compound interest gets applied to the principal balance and accumulated interest. Over time, an account that uses compound interest can lead to paying (or earning) more interest than one that uses simple interest. However, interest is only one factor when opening a new account. You may also want to review the accounts’ other features, terms, and fees to determine which is best. <h2>Compound interest vs simple interest FAQ</h2><h3>1. Is it better to open a compound interest or simple interest account? </h3>You should review the terms of any saving or borrowing product carefully to make sure you’re getting the best deal. That being said, the cost of borrowing may be lower with a simple interest rate loan than with a loan that uses compound interest. Conversely, if you’re saving money, a checking or savings account with compound interest may grow more quickly than one with simple interest. Keep in mind, there are other factors to consider beyond interest when opening a new account. <h3>2. How do simple-interest personal loans compare to compound-interest loans? </h3>Simple-interest loans may accrue less interest over time than loans using compound interest. With simple interest loans, you don’t pay interest on top of the interest that’s already accrued. However, there are unique situations when interest is capitalized and added to the loan’s principal—like when certain federal student loans leave deferment or forbearance. <h3>3. Can simple interest be used for car loans? </h3><a href="https://www.lendingclub.com/auto-refinancing">Auto loan lenders</a> may offer you an auto loan with simple interest, but that depends on the lender. Review the terms of your loan offers to see how interest would be calculated on your car loan. <h3>4. Do banks offer simple interest loans? </h3>You can find simple interest loans from both banks and online lenders. If you’re not sure what the lender uses, ask a representative or review the loan offer. <h3>5. How does LendingClub Bank calculate personal loan interest? </h3>LendingClub Bank offers unsecured <a href="/personal-loan">personal loans</a> that are fully amortized and have fixed interest rates. We charge simple interest, and there’s no prepayment penalty for borrowers who want to save money by paying off their loans early.

Debt-to-income ratio measures your monthly debt payments against your income. Improve it by paying down debts, increasing income, or avoiding new debt.

Your debt-to-income ratio (DTI) is a comparison of your income to your current debt load and it plays a big factor in how lenders determine your borrowing risk. When you apply for a personal loan or line of credit, lenders look at more than just your credit history and credit scores. They also want to know how much debt you’re carrying—and if you can comfortably afford to take on more. That’s where your debt-to-income ratio comes in. <h2>What is debt-to-income ratio? </h2>Your debt-to-income ratio compares your debt payments to your monthly gross income or how much you earn each month before taxes and other deductions. Your DTI ratio gives lenders a clearer picture of your current debt and income, and is used to determine how much money you can afford to borrow responsibly. Examples of debt that lenders will consider: <ul><li>Minimum credit card payments </li><li>Loan payments (such as <a href="https://www.lendingclub.com/auto-refinancing">car payments</a>, student loan payments, <a href="https://www.lendingclub.com/personal-loan">personal loans</a>, and other loan payments) </li><li>Monthly alimony or child support payments </li><li>Rent payment or mortgage payments </li><li>Other debts included in your credit report </li></ul>Examples of debt lenders don’t consider: <ul><li>Utilities like gas and electricity </li><li>Cable bills </li><li>Phone bills </li><li>Health insurance costs </li><li>Groceries </li><li>Entertainment and other variable expenses </li></ul>Lenders typically divide your DTI ratio into two components: front-end DTI and back-end DTI. Front-end DTI Also known as a housing ratio, your front-end ratio includes housing expenses such as monthly mortgage payments, property taxes, monthly homeowner’s association dues, and homeowner’s insurance. Back-end DTI Your back-end ratio includes your front-end DTI plus all your other monthly DTI debt (credit card bills, car loan, etc.) While both are important, most lenders focus on your back-end DTI because it presents the most accurate account of your recurring monthly costs.  Remember, it&#39;s essential to be as accurate as possible when reporting your income to lenders. And don’t forget to include any income from bonuses or overtime pay. Most lenders verify income during the <a href="https://www.lendingclub.com/resource-center/personal-loan/steps-to-how-to-take-out-a-personal-loan">loan application process</a>, so if your numbers differ from theirs, it can delay the process or cause your loan application to be declined. <h2>Why is DTI ratio important? </h2>Along with your credit history and credit score, DTI is one of the most critical measurements of your creditworthiness in the eyes of lenders. It helps them determine how responsible you are with your debt. Having a good DTI ratio matters for a few key reasons: <h3>1. It can help with home buying. </h3>Your DTI has a significant impact on your ability to take out a home loan. <a href="https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-why-is-the-43-debt-to-income-ratio-important-en-1791/">A DTI of 43%</a> is typically the highest ratio one can have to qualify for a mortgage, but mortgage lenders generally prefer that borrowers have a DTI of 36% or less. <h3>2. It can help determine your approval for a personal loan. </h3>When it comes to personal loans, lenders often look for borrowers with a DTI no higher than 40%. However, sometimes exceptions are made for borrowers with a higher DTI but generally good credit. <h3>3. It can help you qualify for better interest rates. </h3>If you’ve lowered your DTI since you last took out a loan, such as a personal or auto loan, you may be able to qualify for a lower interest rate through refinancing. <h3>4. It provides a snapshot of your overall financial health. </h3>If your DTI ratio is below 36%, it’s a pretty good indicator that you can take on and manage new debt responsibly. If your DTI is over 43%—and particularly if it’s over 50%—you’ll likely need to pay down some debt or find other sources of income before lenders will approve you for a mortgage or personal loan. <h3>5. It works in tandem with your credit score. </h3>Though your DTI does not directly impact your credit score, it is closely associated with your credit utilization. If your DTI and credit utilization ratios are both low, you’ll have a better chance of being approved for loans.  Keep in mind: most lenders do not advertise maximum debt-to-income ratios, but instead provide guidelines that offer some flexibility. For example, a common guideline is the 28/36 rule used by some lenders to assess borrowing capacity. According to this rule, a household should only spend 27% of its gross monthly income on housing expenses, and no more than 36% on debt expenses—like car payments and credit cards. <h2>How to calculate debt-to-income ratio in 3 steps </h2>Since lenders use your DTI to determine whether or not you’re capable of taking on more debt, it’s a good idea to know your DTI before you apply. Thankfully, the formula is pretty straightforward: <h3>Step 1: Add up your total monthly debt payments. </h3>Add up all recurring monthly payments that factor into your DTI. <h3>Step 2: Divide that number by your gross monthly income. </h3>Once you’ve totaled all your monthly debts, divide that number by your gross monthly income. <h3>Step 3: Convert the total into a percentage. </h3>Take the number you’ve just calculated and multiply it by 100 to get your final DTI ratio. <h3>Debt to income ratio example: </h3>Sarah wants to calculate her debt-to-income ratio before applying for a loan. Her monthly bills and income are as follows: <ul><li>Rent: $1,200 </li><li>Student loan: $400 </li><li>Credit cards: $300 </li><li>Gross income: $5,000 </li></ul>Sarah&#39;s total monthly debt payment is $1,900:  $1,900 = $1,200 + $400 + $300 Sarah&#39;s DTI ratio is 0.38:  0.38 = $1,900 ÷÷$5,000 In other words, Sarah has a 38% debt-to-income ratio. <h2>How to lower your debt-to-income ratio </h2>Like your credit score, there are a number of ways to improve your debt-to-income ratio. If your current DTI ratio is over 40% (or close to it), you can take a few different routes to improve it. <h3>Pay down existing debt. </h3>Increase the amount you’re currently paying on your monthly debt. Rather than making the minimum credit card or loan payment every month, pay off slightly more. Even a small increase will help decrease your overall debt and lower your DTI ratio as a result. <h3>Avoid additional debt. </h3>Focus on paying down your current debt without adding more recurring debt obligations. <h3>Postpone large purchases. </h3>If possible, avoid making large purchases that will use up a large portion of your available credit. <h3>Create and stick to a budget. </h3>If you don’t already have one, create a personal monthly budget and stick to it. Your budget can help you decrease monthly spending and increase monthly debt payments to pay down your existing debt faster. <h3>Check your DTI ratio regularly. </h3>Make a note to recalculate your debt-to-income ratio on the same day every month. Note any changes, record your progress, and use it for motivation. <h2>The bottom line </h2>The debt-to-income ratio is an important measurement used in the loan application and approval process. Understanding what it is, and what you can do to improve it, may help enhance your overall financial wellness and increase your ability to secure a future loan. To maintain a healthy DTI, keep paying as much as you can toward your debts each month. <h2>Debt-to-income ratio FAQ</h2><h3>What is a good debt-to-income ratio? </h3>Generally, lenders consider at or below 36% a good debt-to-income ratio, though many will lend to individuals with a higher ratio. For example, a <a href="https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-why-is-the-43-debt-to-income-ratio-important-en-1791/">DTI of 43% is the maximum debt</a> to income a borrower can have for a qualified mortgage, but a DTI of 20% would be considered more favorable. <h3>Is monthly rent included in debt-to-income ratio? </h3>Whether or not rent is included in the debt-to-income ratio calculation depends on the type of loan you’re applying for. For a <a href="https://www.lendingclub.com/personal-loan">personal loan</a>, any amount you pay toward housing such as rent counts toward your total monthly debt and will be included in calculating DTI. When applying for a mortgage, your current rental or lease payment is not included in your debt-to-income ratio calculation. <h3>How can I lower my debt-to-income ratio quickly? </h3>The quickest way to lower your debt-to-income ratio (besides getting a pay or salary increase) is to pay off more of your debt than the minimum required. There are a number of different strategies for <a href="https://www.lendingclub.com/personal-loan">paying off debt</a>: the debt avalanche method will pay off debt the fastest, but look into the debt snowball and debt snowflake methods as well. <h3>What are some other ways to lower my debt-to-income ratio? </h3>In addition to paying more toward your debts, you should also avoid taking on more debt and avoid or postpone large purchases that will add to it. Finally, you can find ways to increase your monthly income, such as taking on a side hustle or selling unwanted items online.

Someone might be declined a personal loan due to poor credit score, high debt-to-income ratio, or insufficient income. Next steps include improving credit, reducing debt, or applying with a co-signer. Consider checking your credit report for errors and exploring other lenders.

If you’ve been turned down for a personal loan—don’t panic, and try not to worry. The first thing to know is that having your loan application denied doesn’t define you as a person. Lenders must set minimum qualifications for all loan approvals. If you fall just shy of those qualifications, you may be declined. That doesn’t mean you aren’t smart with money or financially responsible. It just means you must make a few financial adjustments to meet their threshold. Just because your loan application was declined this time doesn’t mean it has to be your last chance. In fact, there is a lot you can do to improve your odds of being approved. <h2>6 Reasons you might be declined for a personal loan  </h2><h3>1. Bad credit history </h3>When it comes to any loan—mortgage, student loan, or <a href="https://www.lendingclub.com/personal-loan">personal loan</a>—credit history is the number one factor lenders consider. Your credit history is the primary way lenders evaluate how likely you are to repay (or default on) a loan. If you’ve had credit hiccups in the past (e.g., past due accounts, collections, bankruptcy) <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-a-good-credit-score-and-how-to-boost-yours">your credit score</a> may not meet the lender’s minimum requirements. You can order your credit reports free of charge through <a href="https://www.annualcreditreport.com/index.action">AnnualCreditReport.com</a> to see where you can improve<a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score"> your credit score</a>. <h3>2. High debt-to-income ratio </h3>Even if your credit history is OK, and you have made all your monthly payments on time, you may have your loan application denied if your debt-to-income ratio (the sum of all your debts divided by your monthly income) is too high.  Generally, a low DTI (under 40%) signals to lenders a healthy balance of debt to income. To <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-to-income-ratio-how-to-improve-it">calculate your debt-to-income ratio</a>, add up all your current debt—including credit cards, auto loans, and student loans—and divide it by your income. If your DTI is too high, paying down debt drops your <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-credit-utilization-and-how-to-improve-it">credit utilization ratio</a> and improves your debt-to-income ratio, increasing your chances of approval. <h3>3. Unstable employment history</h3> Lenders generally want to see that any income listed on your application has been consistent so they can assume it will remain so moving forward. If you have different pay stubs, recently changed jobs (in the last 60 days), or have freelance work from multiple employers, it may create a snag in your income calculations. If your income fluctuates because you’re self-employed or do seasonal work, that doesn’t mean your application will always be declined. While your paychecks may not be consistent or predictable, some lenders may be willing to look at your past tax returns so they can compare your income over a longer period of time. <h3>4. Minimum income requirement not met </h3>Along with income stability, lenders look for proof of income to verify you can repay what you borrow. If your income is below the lender’s threshold, you may be denied, or offered a loan for a lower amount. Make sure you include all forms of income in your next application, including any income from side gigs, investment accounts, or child support payments. <h3>5. Loan purpose mismatch </h3>Personal loans provide a lot of flexibility in how you can use the funds. However, some lenders may not allow you to use them for certain things like:  <ul><li>Secondary education (i.e., college tuition) </li><li>Making investments such as in stocks </li><li>Anything illegal or partially illegal (i.e., gambling).  </li></ul>Make sure the loan application matches your purpose. For example, if you need funds for a professional certification or training, looking into a private or federal student loan may be more appropriate. <h3>6. Missing information or paperwork </h3>Loans almost always require several forms of paperwork, including employment and income information (including tax returns, pay stubs, or bank statements), a credit report, government-issued ID, and in some cases collateral documentation. If you are missing some of this information, you are essentially guaranteed to be denied. Make sure all of your paperwork is in order before you <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-apply-for-a-personal-loan">apply for a personal loan</a> again. You may end up not needing some of it, but it&#39;s better to have it handy just in case. <h2>How to improve your chances of getting approved for a personal loan </h2>If your new loan application was denied for any of the reasons above, here&#39;s a short checklist of action items you can go through to improve your chances of being approved next time. <h3>1. Review your decline notice. </h3>The very first thing you should do is understand why you were declined for a personal loan. Any lender who denies loan approval is required to send an <a href="https://www.thebalance.com/what-s-an-adverse-action-notice-959985">adverse action notice</a>, which lists the reason(s) your application was declined. If you were turned down because of something on your credit report, this notice will tell you what led to the decline in your credit report and the name of the credit bureau that reported the information. Because of the decline, you are eligible to receive a free copy of your credit report. <h3>2. Review your credit report. </h3>Check your credit report for errors and dispute any inaccuracies about your personal finance history with the credit bureau. At least one in five consumers have an <a href="https://www.consumerfinance.gov/about-us/blog/common-errors-credit-report-and-how-get-them-fixed/">error on their credit reports</a>, according to a study by the Federal Trade Commission.  For example, it’s possible someone else’s account information could have been included in your report. Or, if you filed for bankruptcy in the past, be sure your report does not include accounts that have been discharged.  Keep an eye out for inaccurate account information. If you paid a bill on time that is reported late, for example, you can dispute that information with the reporting credit bureau. Closed accounts reported as still active could have a negative impact on your credit score if the account has negative information. Go over not only each account, but your account history as well.And always be on the lookout for any <a href="https://www.lendingclub.com/resource-center/personal-finance/identity-theft-7-tips-to-reduce-your-risk">signs of identify theft</a> such as unfamiliar accounts, purchases you didn’t make, and credit applications you didn’t complete. <h3>3. Boost your credit score. </h3>If your loan application was denied despite an accurate credit report, it could be your <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-a-good-credit-score-and-how-to-boost-yours">credit score</a> is too low. Common reasons include: Late payments: If you&#39;ve missed payments, be sure to get caught up, and continue making on-time payments. Late payments can stay on your credit file for up to seven years. Debt-to-income ratio:Are your credit balances high compared to your income? Pay down your debts as quickly as possible to lower your DTI and total credit utilization. (Struggling with debt? These <a href="https://www.lendingclub.com/resource-center/personal-finance/best-creative-ways-to-pay-off-debt">creative ways to pay down debt</a> can help you pay down your balances faster.) Credit utilization: Are your cards close to their maximum limits? Remember, it&#39;s not just total <a href="https://www.lendingclub.com/resource-center/personal-finance/what-is-credit-utilization-and-how-to-improve-it">credit utilization</a> that matters, but each account limit. Try to bring all your credit balances below 30% for a score boost. Recent inquiries: Have you been applying for credit a lot recently? Business loans, home loans, auto loans? Too many hard inquiries in a short period of time will hurt your credit score and may signal that you’re in financial trouble and need cash quickly. Limit applications to only what you need, and try again in a few months.  Remember, a hard credit inquiry will impact your credit, but a soft inquiry won’t. Most applications are hard inquiries, while pre-approvals are soft inquiries. Learn more about the <a href="https://www.lendingclub.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check">differences between a hard and soft inquiry</a>. Lack of credit history: If you just don&#39;t have enough credit history, consider becoming an authorized user on the account of a spouse or parent with good credit. Make sure the account you sign onto has a good payment history—the older the account, the better. You may also consider a <a href="https://www.experian.com/blogs/ask-experian/what-is-a-secured-credit-card/">secured credit card</a>, which lets you put down a deposit and borrow against it. The limit may not be high, but you’ll earn a monthly credit score boost as you make payments on time. <h3>4. Find a co-signer. </h3>If you don’t have a steady income, have had some financial setbacks, or are still building a good credit history, applying with another person could help approve your application. Applying with a cosigner or co-borrower might even help you secure a better loan than what you would’ve received on your own, i.e., a better rate, a higher loan amount, or both.  And there are additional factors to consider when applying for a joint personal loan. For example, both individuals are obligated to repay the loan, and both have rights concerning the funds. Here’s <a href="https://www.lendingclub.com/resource-center/personal-loan/personal-loans-with-a-cosigner-vs-co-borrower">what you need to know about applying with a cosigner or co-borrower</a>. <h3>5. Apply for a smaller loan amount. </h3>Consider asking for a smaller personal loan than what you need or asked for previously. A smaller loan will appear less risky to a lender, and may help improve your overall DTI picture which could help you qualify. While applying for less than you need may delay reaching your goal as quickly as you had hoped, it could turn out to be the more financially responsible path. For example, if you can start paying down debt with a smaller loan at a lower rate sooner rather than later, that&#39;s a step in the right direction. Always consider all possible options, and run the numbers given your personal financial situation. <h3>6. Shop around. </h3>Not all lenders have the same lending criteria and requirements. Rates, fees, and terms can also vary widely from lender to lender. By shopping around and comparing several loan offers against each other, you could end up saving hundreds, or even thousands, of dollars over the course of your loan. And after working through steps 1-5 above, you may want to try applying through a different lender simply to see if that makes any difference. <h2>Personal loan rejection reason FAQ </h2>Still have questions? Some of these commonly asked questions may provide the answer. <h3>Why does a personal loan get rejected? </h3>Many factors go into determining eligibility for a personal loan. The most common reasons for rejection include a <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-understand-your-credit-score">low credit score or bad credit history</a>, a high <a href="https://www.lendingclub.com/resource-center/personal-loan/what-is-debt-to-income-ratio-how-to-improve-it">debt-to-income ratio</a>, unstable employment history, too low of income for the desired loan amount, or missing important information or paperwork within your application. Your loan could also be rejected if the purpose isn’t for an eligible reason—like trying to take out a personal loan for investing. <h3>What should I do if my loan application is rejected? </h3>Lenders are required to provide an explanation letter for rejected applications. If you’re rejected, read through the letter and determine what can be remedied. For example, you can work to <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score">improve your credit score</a> or <a href="https://www.lendingclub.com/resource-center/personal-finance/best-creative-ways-to-pay-off-debt">pay down high-interest debts</a> to improve your debt-to-income ratio. You can also try to reapply with a cosigner—someone with a high credit score and a secure income—or opt for a <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-apply-for-a-joint-personal-loan">joint personal loan</a>, where co-borrowers share both the loan funds and responsibility for repayment. Both can increase your chances of approval. <h3>Why was my loan declined? </h3>Personal loans can be declined for many reasons, but in most cases it’s due to a poor credit score or unreliable credit history. Before reapplying, take a look at your credit report (you’re allowed one free report per year from Equifax, Transunion, and Experian). If your score is less than good (660 or less), <a href="https://www.lendingclub.com/resource-center/personal-loan/how-to-improve-credit-score">try taking some time to improve it</a>. If you see any <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-read-your-credit-report-identify-red-flags">errors on the report</a>, dispute them immediately with the three major credit bureaus. <h3>How can I avoid being rejected for a personal loan? </h3>Lenders look at your credit score, debt-to-income ratio, income, employment history, and credit history as key markers in determining loan eligibility. If possible, work to improve your personal finances before applying or opt for a joint personal loan with a creditworthy co borrower to strengthen your application.  If you’re concerned about being rejected for a personal loan, consider <a href="https://www.lendingclub.com/personal-loan">checking your rate online first</a>. Checking your rate won’t affect your credit score and can help determine eligibility before you apply.

Need to fill gaps in your budget, cover a large expense, or pay down high-interest debt at a lower cost? Understanding how to take out a personal loan is the first step to securing the funds you need to cover temporary, short-term expenses.

To take out a personal loan, start by determining how much you need to borrow and calculating whether it fits within your budget. Before applying for a loan, research and compare various lenders to find the best interest rates and terms for your needs. Once you&#39;ve chosen a lender that offers the best deal, submit your application. Whether you need to fill gaps in your budget, cover a large expense, or pay down high-interest debt at a lower cost, understanding how to take out a personal loan is the first step to securing the funds you need to cover temporary, short-term expenses. The steps for taking out a personal loan are similar, no matter which lender you choose. Here&#39;s how to take out a loan in 6 simple steps: <h2>How to take out a personal loan in 6 steps </h2><ol><li>Determine how much you need to borrow </li><li>Check your credit score </li><li>Shop around and compare lender options </li><li>Check your interest rate </li><li>Choose a lender and apply </li><li>Accept the loan </li></ol><h3>1. Determine how much you need to borrow. </h3>Before you take out a loan, know how much you need and how much you can afford to repay monthly. Borrow <a href="https://www.lendingclub.com/help/personal-loan-faq/how-much-can-i-borrow">only what’s needed</a> to cover your goal, like paying off credit card debt, covering an emergency expense, or making home improvements. And remember: lenders will consider basic information, including your income when providing repayment terms, but it’s up to you to conduct a thorough review of your financial picture.  Before applying for a personal loan, decide what payment will fit your budget. Consider your monthly expenses and all of your potential sources of extra income. That way, you can compare loan offers based on what you know you can afford. <h3>2. Check your credit score. </h3>Lenders are more likely to approve loans to borrowers with high credit scores and may offer borrowers more favorable terms—like lower interest rates. Review your credit report and run a credit check before you try to take out a loan. You can get one free credit report per year from each of the three credit bureaus: Equifax, TransUnion, and Experian. Make sure to check for any inaccuracies in your report. If you find any, report them immediately to one of the credit bureaus. If your credit score is in the lower range, consider taking steps to improve your score before applying for a <a href="https://www.lendingclub.com/personal-loan">personal loan</a>. Low credit scores can lead to higher interest rates or prevent you from qualifying, so it&#39;s in your best interest to do what you can to make improvements before applying for a loan or borrowing money. Here are some ways to boost your credit before applying for a personal loan: <ol><li>Pay off credit card balances. </li><li>Catch up on overdue payments. </li><li>Avoid new credit applications unless necessary. </li><li>Dispute any <a href="https://www.lendingclub.com/resource-center/personal-finance/how-to-read-your-credit-report-identify-red-flags">incorrect info</a> on your credit report with Experian, TransUnion, or Equifax. </li></ol><h3>3. Shop around and compare lender options. </h3>There are more options than ever for personal loans. You can borrow from a brick-and-mortar bank, credit union, or online lender. The best personal loan for you will depend on your finances and the amount and purpose of the loan. When comparing lenders, make sure to compare APRs—the total cost of your loan, including interest fees—and try to find a lender that doesn’t charge prepayment penalties or hidden fees. But make sure to look at the whole package. Though interest rates, costs, and repayment terms are a big part of the decision, take the time to read reviews and other customer experiences before committing. A company with excellent customer service could help you navigate the process and make your personal loan experience stress-free. <h3>4. Check your interest rate. </h3>When you submit a loan application for a personal loan (or any credit card account), your credit score might take a hit. That’s because a personal loan application—like applying for a new credit card—triggers a hard inquiry on your credit report. Inquiries aren’t necessarily bad, but having too many might look like a red flag. Luckily, many online lenders, like LendingClub Bank, let you check your loan rate and review your potential loan offers before applying without impacting your credit score. <h3>5. Choose a lender and apply. </h3>Once you’ve found a lender that works for your personal finances, complete an application. You may be asked to provide proof of income—like pay stubs, business records, or tax documents—and proof of residence. The steps can vary a bit by lender, but you&#39;ll usually need to give the following details: <ol><li>Name </li><li>Date of birth </li><li>Social Security number </li><li>Physical address </li><li>Contact info </li><li>Desired loan amount, term, and loan purpose </li><li>Employment and income info </li><li>Housing status and monthly payment </li><li>Driver&#39;s license or other government-issued photo ID </li></ol>If you are <a href="https://www.lendingclub.com/resource-center/personal-loan/what-to-do-if-you-are-declined-a-personal-loan">declined</a> for a personal loan for some reason, try not to worry. You’re not alone, and there is a path forward. Taking steps to improve your personal loan eligibility can set you up for success the next time you apply. <h3>6. Accept the loan. </h3>Your lender may send a check for the loan amount or make a direct deposit to your bank account. In the case of a balance transfer loan, they may pay your creditors directly. <h2>Reasons to take out a personal loan </h2>A personal loan is an unsecured loan that can be used for almost anything. A personal loan can help you get the money you need without breaking the bank. Here are four of the most common reasons you might take out a personal loan.  <h3>You need to pay for a large purchase, project, or event. </h3>If you need to make a significant purchase―like replacing an aging furnace, deck, or roof―the interest rate on a personal loan might be better than the annual percentage rate (APR) on your credit card or in-store financing options. If you take out a loan and pay the seller in cash, you may be better off in the long run. <h3>You want to consolidate credit card debt. </h3>Debt consolidation is a way to combine multiple debt accounts so you can pay the total down faster and save money on interest rates. If you’re struggling to pay off debt, in many cases, you can qualify for a lower interest rate and a monthly payment that’s more in line with your budget. LendingClub Bank, for example, offers <a href="https://www.lendingclub.com/personal-loan/balance-transfer-loan">balance transfer loans</a> and joint applications to help members save money and get the lowest possible rates. Over 5 million LendingClub members have used a personal loan to pay down their high-interest debt. <h3>You have unexpected medical or emergency expenses. </h3>Rather than charging unexpected costs to a high-interest credit card, a personal loan can get you the money you need without the stress of credit card debt. A personal loan not only gives you the time you may need to pay the money back, but it can also save you money on interest compared to a credit card. When deciding between the two, compare APRs to determine the best rate. <h3>You want to improve your credit score. </h3>A personal loan may help improve your credit score—especially if your current credit report shows credit card debt as your primary type of credit. A personal loan can help diversify your account mix and may lower your credit utilization ratio, which are important factors in determining your score. Plus, making on-time payments can help boost your payment history. <h2>Taking out a personal loan FAQ </h2>These are some of the most commonly asked questions about how to take out a personal loan. <h3>Is it a good idea to take out a personal loan? </h3>It depends on your current financial situation and what you need. Most personal loans are unsecured, meaning they don’t require collateral. That means if you have a high credit score, steady income, good credit history, and low debt-to-income ratio, a personal loan could be a more cost-effective solution for funding a large or unexpected expense. However, secured loans—like a mortgage or auto loan—might be the better option if you&#39;re trying to purchase a home or car. Before you apply, make sure you meet the personal loan eligibility criteria. <h3>How to take out a small personal loan? </h3>A small personal loan may help cover a temporary spike in monthly expenses or an unanticipated financial burden. Generally, at most $3,000, a small personal loan can be a great way to borrow exactly what you need without relying on credit cards. Because they are typically less profitable than larger loan amounts, mortgages, or auto loans, some major banks won’t offer small personal loans. LendingClub Bank, however, offers qualified borrowers loan amounts as low as $1,000 (and all the way up to $40,000). <h3>How do I get started? </h3>If you’re ready to start exploring personal loan options, start by checking your rate with a few different lenders. This lets you collect your potential loan offers so you can decide where to apply for your loan. At LendingClub, you can check your rate for free without impacting your credit score.

From groceries and diapers to Halloween costumes for pets, nearly 60% of American consumers prefer to shop online for everyday items that make life more convenient, comfortable, and enjoyable. And with rising prices showing no signs of stopping anytime soon, we’re pleased to introduce StackitTM from LendingClub Bank—a new browser extension that automatically finds and rewards eligible members with coupons and cash back for extra savings at more than 15,000 favorite online retailers.

From groceries and diapers to Halloween costumes for pets, nearly 60% of American consumers prefer to shop online for everyday items that make life more convenient, comfortable, and enjoyable. And with rising prices showing no signs of stopping anytime soon, we’re pleased to introduce StackitTM from LendingClub Bank—a <a href="/member-benefits/stackit/install?utm_source=Internal&utm_medium=Blog&utm_campaignid=stackit_launch">new browser extension</a> that automatically finds and rewards eligible members with coupons and cash back for extra savings at more than 15,000 favorite online retailers.<h2>Limited Time Offer to Double Your Cash Back Through 12/31/22</h2>Stackit is a free, new cash back and rewards program available to personal loan members that’s easy to download and install. Eligible members can activate their favorite offers with one click to start saving while stacking cash back offers with existing loyalty program rewards at eligible stores.“We’re relentless when it comes to giving customers more, and Stackit is a perfect example of this,” said Amber Carroll, SVP of Membership and Lifecycle Marketing. “Stackit appears as you shop so it’s easier to activate. You can redeem your cash back for gift cards from hundreds of online stores. And you can continue accumulating loyalty points from merchants and rewards from credit cards while we stack coupon savings and cash back earnings on top of all of it,” she said. “Stackit demonstrates our promise to help members make smart money moves that are both easy and rewarding.”To celebrate the new Stackit rewards program, LendingClub is offering its personal loan members double the cash back on eligible purchases made now through the end of the year. To start earning and stacking rewards, eligible members can simply <a href="/member-benefits/stackit/install?utm_source=Internal&utm_medium=Blog&utm_campaignid=stackit_launch">add the new Stackit Extension</a> to their browsers—doubling their earnings for a limited time through 12/31/22.* Cash back can be redeemed for e-gift cards through the Earnings Dashboard.<h2>New Name, Better Rewards</h2>Earlier this year, LendingClub soft-launched its exclusive member rewards program as a separate Chrome browser extension test that was made available to a small subset of customers. Drawing from these learnings,Stackit is LendingClub Bank’s new and improved rewards program featuring a new extension, expanded browser availability, and enhanced account integration that is rolling out to a wider member audience beginning in November.Currently, any LendingClub personal loan member can download and start using the new Stackit browser extension. (Users of the old LendingClub Chrome Extension can continue earning cash back through 11/30/22; any amount remaining in users’ accounts after 11/30 will automatically be paid out via PayPal. Members are advised to add the new Stackit Extension to continue earning cash back and rewards, including double cash back, on future purchases.) In addition to Chrome,Stackit expands browser availability to Safari and Edge, and enables members to view recent transactions and cash back earnings inside their LendingClub account instead of a third-party site. Planned rollouts to LendingClub members with Auto, Deposit, and other accounts beyond personal loans are expected, however, timing is still under consideration.*Double Cash Back Offer on eligible transactions expires 12/31/22. See <a href="/legal/terms-of-use">Terms of Use</a> for full details. Offer is subject to change without notice.Stackit is a non-deposit product offered by LendingClub Bank.

Even in today’s low-yield, high-inflation environment, it’s essential to keep a certain amount of money in an easy-to-access checking or savings account for things like daily household and emergency expenses, or to meet short-term financial goals. 

Even in today’s low-yield, high-inflation environment, it’s essential to keep a certain amount of money in an easy-to-access checking or savings account for things like daily household and emergency expenses, or to meet short-term financial goals. However, recent <a href="https://www.fdic.gov/analysis/household-survey/">FDIC research</a> shows approximately 7.1 million Americans are “unbanked,” meaning they do not have a basic checking or <a href="/personal-savings">savings account</a>.<h2>Being Unbanked Increases Costs for Families</h2>Reasons for being unbanked (and underbanked) vary from not having enough money to meet a minimum balance and high or unpredictable fees, to having a history of credit, ID, or banking problems, and/or a general distrust of financial institutions.As a result, this drives unbanked individuals to expensive, alternative financial outlets—such as check cashers, payday lenders, and pawn shops that charge high fees for financial products and services—to manage their money. Such fringe financial “solutions” hold people back from making meaningful financial progress, many of whom are living on low incomes and, likely, already struggling to make ends meet. Without a <a href="/personal-checking/rewards-checking">checking account</a>, these families wind up overpaying for basic financial transactions, making it difficult for them to build savings and assets over time.<h2>More Rewarding Banking for More People</h2>In light of this, we’re proud to share that recent improvements to LendingClub Bank’s <a href="/personal-checking/rewards-checking">award-winning Rewards Checking</a> has earned us official certification by the national Cities for Financial Empowerment Fund as meeting the BankOn National Standards for trust and affordability for consumer transactional accounts.Key features of our award-winning Rewards Checking account include:<h3>Low Minimum Opening Balance</h3><ul><li>Access Rewards Checking with an opening deposit of only $25</li><li>Freedom from Fees Save more of your hard-earned money with no overdraft, monthly maintenance, and incoming wire transfer fees1</li></ul><h3>Unlimited Cash Back</h3><ul><li>Earn <a href="/personal-checking/rewards-checking">unlimited 1% cash back</a> on Qualified (signature-based) Purchases when using your Rewards Checking debit card2</li></ul><h3>Free ATM Access</h3><ul><li>Enjoy <a href="/help/checking-accounts-faq/how-do-i-earn-atm-rebates-on-my-checking">ATM access with no LendingClub ATM fees</a>, plus get unlimited ATM fee rebates on fees charged by other banks3</li></ul><h3>Get Your Paycheck Early</h3><ul><li>Set up direct deposit into your account and you could be eligible to receive your money up to 2 days earlier4</li></ul><h3>Earn Interest</h3><ul><li>Earn an APY that’s more than the national average with account balances of at least $2,5005</li></ul><h3>FDIC Insurance</h3><ul><li>Rest easy knowing your deposits are FDIC-insured up to the maximum amount allowed—$250,000 per depositor for each ownership category</li></ul><h3>Best Online Experience</h3><ul><li>Based on our easy-to-use mobile app and award-winning <a href="/personal-checking/rewards-checking">online checking account</a>, NerdWallet named us Best Bank or Credit Union for Online Experience</li></ul><h2>What Our Members Say</h2>It’s important knowing we’re offering products and services that are helping to improve the financial lives and stability of all Americans, including unbanked and underbanked individuals and families, in every community across the United States.Here’s what some of our members have to say about their Rewards Checking experience with LendingCLub Bank:“I never knew how much money I was losing with my old bank whenever I used an ATM. [LendingClub Bank] reimburses fees from ATM’s and now I look forward to getting the cash back every month.”Robin, a LendingClub Bank Member“The rewards checking account with cash back every month has helped me ditch my credit card and debt.”Lauren, a LendingClub Bank MemberRead more member reviews.<h2>Your Financial Well-Being Matters to Us</h2>At LendingClub Bank, making <a href="/personal-checking/rewards-checking">checking accounts</a> more rewarding for more people is an example of our belief that financial well-being should be attainable for everyone—not just for those who can afford it. Everything we do is centered around empowering our members to meet their personal financial goals by enabling access to a broad range of financial products, services, and educational resources, all designed to help them pay less when borrowing and earn more when saving. Testimonials reflect the real-life experiences of individuals who used our products; however, individual results may vary.<hr/><h4>Terms and Conditions</h4>Accounts subject to approval. $25 minimum opening deposit required. See Product Terms &amp; Conditions for additional details.1. Miscellaneous fees may apply. View Product Terms &amp; Conditions for complete details.2. The Debit Card Rewards Program (“Cash Back Rewards”) provides 1.00% cash-back on all Qualified Purchases using a debit card tied to an Eligible Account.Eligible Accounts are: Rewards Checking accounts that meet the following requirements for the calendar month in review:1). Maintain an average monthly balance of at least $2,500.00; or 2). Receives at least $2,500.00 in Qualifying Direct Deposits.Qualifying Direct Deposits are defined as: Recurring Automated Clearing House (ACH) credits, including payroll, pension or government payments (such as Social Security) made by your employer, or an outside agency. We may require documentation to verify that credits are Qualifying Direct Deposits. Qualifying Direct Deposits do not include peer to peer payments or ACH transfers (funds transfers) from your external accounts.Qualified Purchases are defined as: Signature-based purchases made using the debit card tied to an Eligible Account. These are “credit” purchases that can be made in stores and online. To make a signature-based purchase, select “credit” rather than debit at point-of-sale kiosks. The “credit” option is most often pre-selected when making purchases online using a debit card. Online subscription payments may not be considered signature-based purchases. The payment transaction type (signature-based or other) is ultimately decided by the merchant and is based on how the transaction is transmitted at the time of processing. Qualified Purchases do not include: (1) any goods or services purchased that are returned or otherwise credited to your Eligible Account; (2) unlawful purchases; or (3) purchases of currency, cash or cash equivalents (including, without limitation, currency from the U.S. Mint, Travelers Checks, gift cards, cryptocurrency, casino chips, peer to peer payments, prepaid debit cards, account openings, loan payments, or other cash equivalents). We may report the value of Cash Back Rewards to the IRS as required by law. Any client whose tax status would require us to impose tax withholding of any sort will not be eligible for Cash Back Rewards. Accounts are reviewed after the end of each month. Any earned Cash Back Rewards will be credited to your account on or before the 10th calendar day of the next calendar month. The Eligible Account must be open and active at the time the Cash Back Reward is credited.3. LendingClub does not charge a fee for using another bank’s ATM. Plus, get unlimited automatic ATM surcharge rebates for ATM fees other banks charge you. ATM surcharge rebates apply to cash withdrawals from a Rewards Checking account. ATM fees will be rebated at the end of each statement cycle. Excludes international exchange fees. LendingClub makes its best effort to identify those ATM fees eligible for rebate. In the event that you have not received a rebate for a fee you believe is eligible, please contact Customer Service at 800.242.0272. LendingClub reserves the right to modify or discontinue the ATM surcharge rebate program at any time. Out-of-network ATM fees cost $2.50 on average — source: CNBC as of 01/26/2022. If someone were to use an out-of-network ATM 6 times per month at an average fee of $2.50 per withdrawal, they would spend $180 in ATM fees in 12 months.4. Any account features that enable you to receive direct deposits, or that enable direct deposit funds to be made available to you early, are contingent upon and subject to the payor’s support of such features. 5. Annual Percentage Yield (APY) accurate as of 8/1/2022. Rate tiers are as follows: 0.00% APY applies to balances of $0.00–$2,499.99, 0.10% APY applies to the entire balance on balances of $2,500.00–$99,999.99, and 0.15% APY applies to the entire balance of $100,000.00 or more. Rates are variable and are subject to change, at the discretion of the bank and without notice, at any time after an account is opened. Fees may reduce earnings.

Since 2007, LendingClub has been on a mission to deliver a world-class experience to all our members. This month we took a moment to reflect on the more than four million members who have chosen LendingClub as their partner to help them reach their financial goals.

Since 2007, LendingClub has been on a mission to deliver a world-class experience to all our members. This month we took a moment to reflect on the more than four million members who have chosen LendingClub as their partner to help them reach their financial goals.As the leading digital marketplace bank in the U.S. built on the belief that innovative, creative solutions deliver more value and a better experience, we’re always looking for new ways to provide more. In early 2021, LendingClub became a bank holding company operating a national bank, allowing us to expand our products and level the playing field for everyone.  “Every day we help members leverage their money so they can earn more when saving and pay less when borrowing,” said Amber Carroll, Senior Vice President of Membership &amp; Lifecycle Marketing at LendingClub. “We&#39;re working to redefine banking, which means ensuring our interests are well aligned with those of our members and introducing new ways to better serve their needs.” Since the beginning of the pandemic, how we work, live, and manage our finances has evolved in ways most of us would never have imagined. Increasingly, more Americans across varying credit profiles are struggling to stretch their dollars between paychecks. According to a recent survey from LendingClub and PYMNTS, even among workers earning more than $100,000 per year nearly half are living paycheck to paycheck.  At LendingClub, we’re inspired every day by our members who continue to strive for financial well-being during these unprecedented times—such as by consolidating their credit card debt into a single, more manageable payment, refinancing their auto loan to free up room in their budget, or taking advantage of a CD or high-yield savings account to invest in their future. The Club is working hard to help members reach their goals and we’re incredibly proud to help simplify their path. As one of member recently shared: “This is the third time I have utilized LendingClub&#39;s great rates and lending plans to assist with home repairs and debt consolidation. Their application and payment processes are quick and simple to use. I have saved so much time and money using this funding!” — Christine, a member from Texas We believe everyone deserves a better financial future. If you’re ready to improve your financial well-being and are not already a member of the Club, we can help. From banking smarter with your <a href="/personal-deposits/online-banking">personal checking and savings</a>, to working toward larger financial goals—like <a href="/personal-loan">consolidating debt</a>, <a href="/auto-refinancing">refinancing an auto loan</a>, or making home improvements—you can easily check your rate for a personal loan in minutes, with no impact to your credit score. Thanks again to all of our members for helping us achieve this incredible milestone.

In March 2022, we hosted our first quarterly webinar where we celebrated our one-year anniversary as a digital marketplace bank. 

In March 2022, we hosted our first quarterly webinar where we celebrated our one-year anniversary as a digital marketplace bank. During the webinar, Anuj Nayar, our Financial Health Officer, discussed:<ul><li>Our journey to get to where we are today </li><li>Lessons learned from our 15-year history as a fintech pioneer</li><li>How we’re leveraging our digital marketplace bank to further our mission to help Americans on their path towards financial health</li><li>We recently reported Q4 2021 and year-end earnings</li><li>New data on the financial health of U.S. consumers from our latest Paycheck-to-Paycheck report</li></ul>A historic milestone, as one of the first fintech company to acquire a national bank we’ve paved the way for other fintechs to follow suit. With 15 years under our belt, more than 3.9 million members, and over $70 billion in loan originations, the marriage of LendingClub’s marketplace fintech business with all the benefits of being a bank is fundamentally changing the nature of our business and influencing change across the banking industry as a whole. We’re also creating something new for our members -- a bank that puts the customer at the center of what we do. <a href="https://vimeo.com/686043451">Check out the video below to learn more.</a>

LendingClub completed the acquisition of Radius Bank in February 2021. At that time, in addition to the direct-to-consumer deposit business, we inherited a fintech partner program, and several lending businesses. As we reach the one-year anniversary of the acquisition, and in conjunction with the conclusion of a strategic review of our business operations, we have made the decision to discontinue certain businesses that don’t fit our mission.  

LendingClub completed the acquisition of Radius Bank in February 2021. At that time, in addition to the direct-to-consumer deposit business, we inherited a fintech partner program, and several lending businesses. As we reach the one-year anniversary of the acquisition, and in conjunction with the conclusion of a strategic review of our business operations, we have made the decision to discontinue certain businesses that don’t fit our mission.  This includes our yacht loan business. Yacht loans are simply not in line with our mission to help everyday Americans on their path to financial health and we plan to grow our auto refinance business to take its place.  During the review, we also thoroughly examined relationships and operating activities for the fintech partners. As a result of our review, we are asking certain partners to modify their activities and/or operations to match expectations and contractual commitments, and we have begun exiting certain partners. As part of the ongoing dialogue with these partners, we have discussed transition plans or operational changes that could impact the services available to these partners and their customers.   As a pioneer in this space, we have a unique perspective. We operated for 15 years as a fintech with a partner bank model and now we operate as a fintech, a bank, and a partner bank. We work hard at LendingClub to maintain and build a robust, secure, compliant and scalable enterprise. We are guided by our core values, our extensive experience, our deep data set and technology investments, and governed by strong controls, to deliver on behalf of our members, communities, shareholders, partners, and team members.  These business model changes will have no material effects on our business operations and we plan to report more details when we issue our Full Year 2021 and Q4 earnings in a few weeks. Scott Sanborn CEO  LendingClub<hr/>Safe Harbor StatementSome of the statements above, including statements regarding  the effect on our business operations as a result of the business model changes, are &quot;forward-looking statements.&quot; The words &quot;anticipate,&quot; &quot;believe,&quot; &quot;estimate,&quot; &quot;expect,&quot; &quot;intend,&quot; &quot;may,&quot; &quot;outlook,&quot; &quot;plan,&quot; &quot;predict,&quot; &quot;project,&quot; &quot;will,&quot; &quot;would&quot; and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. Factors that could cause actual results to differ materially from those contemplated by these forward-looking statements include those factors set forth in the section titled &quot;Risk Factors&quot; in LendingClub&#39;s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each as filed with the Securities and Exchange Commission, as well as in LendingClub&#39;s future filings made with the Securities and Exchange Commission. LendingClub may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. LendingClub does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Related Impact

We offer several ways for you to make your monthly auto loan payment, so you can choose the method that works best for you. A statement will be mailed to you every month that shows the payment amount and due date.

We offer several ways for you to make your monthly auto loan payment, so you can choose the method that works best for you. A statement will be mailed to you every month that shows the payment amount and due date.<h3>Set up automatic payments</h3>Signing up for automatic payments means you won’t miss any payments, and you’ll save money on postage. You can set up autopay from your To-Do List after you apply. Once you sign up, we’ll debit your payment from your bank account each month. If you do not elect this option during the application, you can enroll after a loan is issued to you by visiting our servicing partner’s site: <a href="https://santanderconsumerusa.com/payments/auto-pay">https://santanderconsumerusa.com/payments/auto-pay</a> <h3>Pay online, by phone, or by check</h3>Once your loan documents are finalized, you’ll receive a welcome email or letter providing details on how to make your payments. You can also visit our servicing partner&#39;s site for payment options: <a href="https://santanderconsumerusa.com/payments">https://santanderconsumerusa.com/payments</a>. Payments and loan payoffs for Auto loans should be mailed to our servicing partner, Santander Consumer USA, at:Santander Consumer USA3000 Kellway Drive, Suite 120Carrollton, TX 75006If you need help or have any questions, please call 888-845-0010 Monday through Friday from 8 am to 4 pm Pacific Time.

LendingClub provides a year-end statement that summarizes your account activity, including how much interest you’ve earned and information regarding Notes tied to loans that have been charged off.

LendingClub provides a year-end <a href="/help/investing-faq/where-do-i-find-statements-and-forms">statement</a> that summarizes your account activity, including how much interest you’ve earned and information regarding Notes tied to loans that have been <a href="/help/investing-faq/what-do-the-different-note-statuses-mean">charged off</a>.Consult with your accountant or other tax advisors on how to properly type: asset-hyperlink id: 3qvoScA6m5AgjXtqJMLU6r on your annual Notes activity, including whether you can <a href="/help/investing-faq/what-affects-my-notes-portfolio-performance">claim losses from Notes</a> tied to charged-off loans.

Once you’ve submitted your application, we’ll try to confirm your information on our own. Sometimes, you may need to submit a few documents to confirm your identity, income, or vehicle ownership.

Once you’ve submitted your application, we’ll try to confirm your information on our own. Sometimes, you may need to submit a few documents to confirm your identity, income, or vehicle ownership. For some documents, you can upload a screenshot or copy to your <a href="/auth/login">To-Do List</a>. If you initiate a title transfer, we’ll need documents mailed to us.<h2>Documents you can upload to your To-Do List</h2><ul><li>Driver’s license—a current and valid state-issued driver’s license.</li><li>Proof of registration—the registration for the car you’re refinancing. To prevent delays, ensure that your registration is up to date and that you’ve paid all outstanding fees.</li><li>Proof of insurance—the insurance card for the car you’re refinancing. Ensure your name, vehicle identification number (VIN), and policy number are clearly visible. LendingClub requires that you carry full-coverage insurance on your car. Full-coverage insurance includes comprehensive and collision coverage.</li></ul>Learn <a href="/help/auto-refinance-faq/how-do-i-upload-auto-refinance-documents">how to upload documents</a>.<h2>Documents to mail using a prepaid shipping label</h2><ul><li>Title transfer documents—enables LendingClub to transfer your car title from your previous lender to us. A limited power of attorney (LPOA) shows that you’ve authorized the title transfer. Once we’re ready for the title transfer, we’ll email you a form to print out and sign. You can then mail the form back to us using the prepaid shipping label we provide. In some cases, your LPOA may need to be notarized.</li></ul>Learn more about <a href="/help/auto-refinance-faq/how-do-i-submit-title-transfer-documents">title transfer documents</a>.

Once you submit your Auto Refinance application, we may ask you for additional paperwork to verify your information.

Once you submit your Auto Refinance application, we may ask you for additional paperwork to verify your information.Check out your <a href="/auth/login">To-Do List</a> to see if we&#39;ve requested that you send us any documents. If we have, the fastest and easiest way to submit them is to upload them right to your account.<h2>Upload from your computer</h2>To upload documents from your computer:<ol><li>Scan or take a picture of the document and save it to your computer.</li><li>Double-check that the image is clear, legible, and includes the whole page.</li><li>Sign into <a href="/auth/login">your Member Center</a>.</li><li>In your To-Do List, click the document you want to upload.</li><li>Click Choose files to select the file you want to upload or drag and drop the file from your computer.</li><li>If you want to submit additional pages or documents, click Choose files or drag and drop the other files from your computer instead. You can upload up to 20 separate files for each document type.</li></ol><h2>Upload from a mobile device</h2>To upload documents from your mobile device:<ol><li>Sign into <a href="/auth/login">your Member Center</a>.</li><li>In your To-Do List, tap the document you want to upload.</li><li>Tap the +  icon at the bottom of the screen.</li><li>Upload the document by taking a photo, selecting an image from your photo library, or browsing for the file.</li><li>If you want to submit additional pages or documents, tap Upload another. You can upload up to 20 separate files for each document.</li></ol><h2>Fax your documents</h2>To fax us your documents:<ol><li>Click I&#39;d prefer to fax my documents at the bottom of your To-Do List.</li><li>Select which documents you&#39;d like to fax.</li><li>Click Print Fax Cover Sheet and fill it out.</li><li>Fax the cover sheet with your documents to 844-303-6887.</li></ol>If you don&#39;t have access to a printer, you can make your own cover sheet. Just make sure it includes:<ul><li>Your name</li><li>Your <a href="/help/personal-loan-faq/how-do-i-manage-my-account">loan number</a></li><li>The total number of pages in your fax</li></ul><h2>Tips on uploading documents</h2>Follow these tips to make sure your documents are ready for review:<ul><li>File is 8 megabytes (MB) or smaller</li><li>File type is GIF, JPG, PDF, PNG, or TIFF</li><li>Document is clear, legible, and not cut off</li><li>Photos show the document at a readable size and have a dark, contrasting background</li><li>Your name is on the document</li><li>It shows an address that matches the address you provided on your loan application, if relevant</li><li>Document is current—not expired</li><li>All pages are included (yes, even those blank ones at the end!)</li></ul><h2>Confirming we received your documents</h2>When we receive your documents, the status in your To-Do List will reflect that we have them. We get notified automatically and will start reviewing them. We’ll be in touch if we need anything else.

If we’re not able to offer you a lending product, you're welcome to apply through one of our lending partners.

If we’re not able to offer you a lending product, you&#39;re welcome to apply through one of our lending partners. Sign into <a href="/auth/login">your Member Center,</a> or check your Adverse Action notice for more information on those options.You’re also welcome to come back and apply with us again in the future. Your credit profile can change as frequently as every 30 days, and this (along with changes to your employment, income, or existing debt) could change the outcome.Still have questions? Keep reading for answers.<h2>Why was I declined?</h2>The specific reasons for the decline are provided in an Adverse Action (AA) notice. Sign into <a href="/auth/login">your Member Center</a> and head to the Loan Documents page to see that notice.The AA reasons you’re given should help provide some context for why we couldn’t approve the application—and what you can focus on changing before you reapply.<h3>Understanding terms in your AA notice</h3>These are a few terms you might see in your notice, and what they mean:<ul><li>Credit Inquiries—Instances when your credit was checked</li><li>Delinquent Payments—Payments not made on time</li><li>Installment Account/Installment Loan—Loans or accounts with fixed payments over a fixed period of time, like a mortgage or auto loan</li><li>Revolving Accounts—Accounts with maximum limits that allow you to use variable amounts of credit up to that maximum, like a credit card</li><li>Revolving Balance—The portion of an account balance that goes unpaid at the end of a billing cycle and accrues interest, like your outstanding credit card balance</li><li>Revolving Debt—Another term for the debt you have on your revolving accounts</li></ul><h2>Will a decline hurt my credit score?</h2>No, when you apply, we perform a soft credit inquiry to understand your credit history, which doesn’t affect your credit score. You’ll see the inquiry if you look at your report, but other lenders won’t see it at all.<h2>Why was I declined after receiving an offer?</h2>At LendingClub, you apply online and find out instantly whether you’re pre-approved and what your offer is. If you choose to take the offer, we may ask you for documentation to verify your identity, employment, or income.If you don’t send us the documentation, or if your documents don’t match the information on your application, this may result in a decline.<h3>Pre-approved mail offers</h3>We use information provided by credit bureaus to identify potential borrowers and proactively mail them invitations to apply.When you respond to a pre-approved offer, we request updated information from credit bureaus to verify that you still meet the criteria the offer was based on. We may also request additional information, such as income and employment status. If changes have occurred in your credit report or other information since we identified you as a potential borrower, your application may be declined.Whatever the reason for the decline, it’s important to us that we let you know the final decision as soon as possible. That way you can know how to improve your application next time, or you can explore your other options as needed.

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