Consumers turning to peer-to-peer lending for holidays

The holidays are an expensive time of year for most consumers, as the desire to buy gifts for loved ones often trumps financial considerations. For that reason, many Americans incur considerable debts during this time of year. Recent data from Consumer Reports shows more than 14.1 million U.S. consumers of are still paying off holiday-related spending from last year, compared to 13.6 million in 2009. While most consumers rely on their credit cards as their primary form of financing, the popularity of peer-to-peer lending is growing. These small loans replace high credit card interest rates and capricious monthly payments with lower rates and fixed payment terms. "Unfortunately, millions of Americans will likely incur thousands of dollars in high-interest credit card debt as a result of over-spending this holiday season," said Chris Larsen, CEO and founder of Prosper.com. "Instead of continuing the cycle of expensive, variable, revolving credit, a P2P loan can be a much more affordable way for consumers to lower their costs, improve their personal balance sheet and eliminate debt." As lenders beef up their consumer credit risk management policies, alternative lending sources are seen by many as viable options for holiday financing.