Closing the Lending Club account – experiment failed

I’ve written before about my experiment with the social lending “Lending Club” site.

Well, I’ve had enough. The rate of return is barely half of the advertized (after 2 defaults and 2 notes paid off within months, I’m at ~6.5% net return, vs. >10% advertized for the most conservative portfolio offered to me). With such a rate, I can do better with mutual funds and ETF’s, without giving up the liquidity of my investment.

In addition, their customer service is below any minimal expectations. The web site has a lot of bugs, the error messages are not clear, and it is very difficult to understand what it is that you’re doing wrong. I have not received any proper tax documents. What especially got me upset is the ridiculous requirement to remember your old bank account if you want to change to a new one.

I mean, really? Not enough that they only allow linking a single bank account, but if you want to change from the one you closed before to a different one – you need to actually remember the account number you had set up there before! What world are they living in? I don’t even remember my own phone number, they want me to remember a bank account number for an account I’ve closed a year ago? What if the bank is out of business? What if the customer moved and cannot reach the branch to have the clerk retrieve the old account number?

Lending Club has a solution for them – pay them $15 and they’ll mail you a check. They’ve never heard of on-line identity verification, or a decent customer service. Well, I’m not going to be their customer.

Your Little Advisor.

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4 Responses to Closing the Lending Club account – experiment failed

  1. Pingback: Nice thing going on in East Palo Alto - The Little Advisor

  2. HunterF says:

    If 2 defaults affected your return that much I can tell you that your “experiment” was flawed from the beginning. If I read your blog correctly, you only invested $500. That amount will only get you 20 notes (invested at $25/note). You need at least 100 notes to properly gauge any type of return with a peer to peer lender. As for LC’s customer service, you’re the first person that I’ve come across that’s had anything bad to say about them. Furthermore, you’re the first I’ve seen complain about the ease of use of the website.

    • I don’t know how about you, but 10% default rate doens’t invite me to invest more. You want me to invest in 100 notes to have 20 notes in default? What for? What good does it make to me? I let their software to choose the notes for me based on my not-so-risky investment goals, and I ended up with half the advertised ROI, and 10% default rate. To me its pretty clear, but every one is free to make their own choices.

  3. Yan Shapiro says:

    I don’t know about the others expierence, particularly, of Mr. Hunter. To my expierence, it were months, not just one, I had minus profits because of strange charges offs and defaults. I have the lending account for about 10 years. And now something new – they’re charging lenders for the borrowers late payments! Is not their responsibility to get right borrowers in order do not get such fantastic rate of defaults and charges off? Why lender should pay for their mistakes!?

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