The following post is by Kevin Yu at SpringCoin.

When we think about credit cards, it’s a natural to have a negative reaction towards it. However, it’s almost necessary to use credit cards for some purchases. (hotels, car rentals, or airlines). One of the main benefits of having a credit card is the ability to build your credit and also to rebuild your credit.

Using credit cards is one of the fastest ways to build trust with lenders, but the problem surfaces when people don’t use credit responsibly.

If you’ve been buried in debt, you already realized how tough it was to climb out of the hole. Trust me; I’ve been in your shoes. The real question you should be asking yourself throughout the process is, “How will I prevent becoming a repeat offender?” This is where SpringCoin comes in.

SpringCoin is an automated debt relief coach that helps people get out of debt and increase their financial knowledge. We believe that financial literacy is just as important as getting out of debt. SpringCoin provides you a personalized “get out of debt roadmap” to help you figure out who to pay, when to pay, and how much to pay.

Along your journey, we’ll provide you weekly goals, challenges, and quizzes to accelerate your get out of debt process. Our goal is to make you more financially literate once you finally paid off your last credit card.

Weekly Goals: SpringCoin provides (3) weekly goals for you designed to help you pay off your debts even faster. By completing each task, you can earn reward points that you can enter into raffles for prizes or cash!

Bird’s Eye View of Account Balances: If you’ve used Mint before, it’s great to see an overview of all your account balances without logging into each account. You can connect your credit cards with SpringCoin to get an up to date balance for each credit card.

Budgeting Tool: SpringCoin will generate a recommended monthly budget for you. Of course you can change your budget if you wanted to, but they’ll keep track of your spending for you.

Bill Reminder: Not only can you connect your credit cards, but you can also connect your utility, phone/cable, or student loan bills. They’ll send you upcoming reminders of any bills that are due so you don’t incur any late fees.

Personalized Roadmap: Lastly and certainly not least, SpringCoin gives you a debt free roadmap to help you pay down your debts as fast as possible. You can track your progress and change your monthly payment amount as well.

I’ve been in your shoes before, so I know what it’s like to take the very first step. That’s why SpringCoin teamed up with CreditShout to give its readers a free lifetime account for anyone who registers an account in the month of May. Pay off debt, get rewarded, and use credit responsibly.

Prosper claims to be the market leader in peer-to-peer lending. The website is very upfront about interest rates, fees, and how it works. However, investors can’t browse available investment opportunities without first depositing money into an account for investment. You can earn returns as high as 10.46%, and can begin investing with as little as $25.

It takes two minutes to get your loan rate at Prosper.com. Provide your credit rating, annual income, socia security number, address and phone number, and desire loan amount, and you’ll get your quote, as well as other options.

To compare rates between LendingClub and Prosper, I used the same parameters that I used in this introduction to peer-to-peer lending. LendingClub.com offered me an APR of 21.73 % for my $10,000, three-year loan, while Prosper.com wanted to give me between 28 and 31%. This was with a “good” credit score, which leads me to the conclusion that you need excellent credit to benefit as a borrower with peer-to-peer lending.

Interest rates, in general, trend higher at Prosper.com, with 35.84% as the highest APR available. The maximum APR at LendingClub.com is 27.99 %.

Checking your rate at Prosper.com is a “soft” credit inquiry and, although the website asks for your social security number, you won’t take a credit score hit when you check your rate.

I may be a personal finance blogger, but rules change so quickly — especially when it comes to FICO credit scores — that I admit I don’t know it all, So, when I made a few big purchases and maxed out my Chase Freedom credit card — and then some — I wondered what this would do to my FICO score.

How does surpassing your credit limit affect your credit score? Keep reading to find out.

The scenario: You have an American Express charge card with no pre-set spending limit, or a World MasterCard or Visa Signature high-end credit card that permits you to exceed your credit limit as long as you pay off the amount over your limit in full when the bill comes due.

If you have one of these cards, it may be advertised as having “no preset spending limit,” but you may see a credit limit amount on your statement each month. Anything you charge over that amount must be paid by the time your bill is due.

Verdict: LendingClub.com appears to be more beneficial to investors — offering returns up to 24.54%, with average returns between 9 and 12 %. Other investments — short of day trading by experienced stock professionals — simply will not yield this type of return in today’s economy.

For borrowers who cannot obtain a loan or credit card by conventional means, LendingClub.com may provide a way to get money to start a business, consolidate debts, pay for a vacation or wedding, or anything else people might need cash for. The competition to have investors select your loan is steep, but it’s a different process than what you’d face with banks or credit card companies, leveling the playing field if you have a good credit score and a good story to tell. (A large social network with deep pockets can’t hurt with online peer-to-peer lending, either.)

As with other types of borrower/lender relationships, the lender gets the better deal at LendingClub.com. While it may not be the best way to borrow money, it offers an excellent ROI with little risk (if you diversify) for investors.

Verdict: The Green Dot Prepaid Card is a convenient way to make online purchases or to avoid carrying cash for transactions if you don’t have a bank account or a credit card. However, the card’s limitations, along with the $5.95 monthly fee whether or not you use the card, makes it an expensive choice. Other options, such as a Paypal debit card or simply opening a checking account at a bank or credit union and getting a debit card, make more financial sense.

Peer-to-peer lending, like other options for people who feel they are drowning in credit card debt, looks like a viable solution until you begin to investigate more deeply.

Let’s explore how peer-to-peer lending works and then compare it to some other choices to pay off credit card debt.

Peer-to-peer lending, as its name implies, bypasses the banks, and permits people to loan money to other people. For the lenders (the investors) this is one way to invest any amount of money, beginning at $25, and earn an average of about 10% return. This is a good return in any economy; with interest rates down, it’s especially appealing right now.

But what about the borrowers?

TheLendingClub.com, one of the two largest and most well-known peer-to-peer lending sites (the other is Prosper.com), advertises rates as low as 6.78% APR, with a maximum APR of 27.99%.

Realistically, you will not get a 7% interest rate for a debt consolidation or credit card re-financing loan. I ran a few scenarios to get some ideas of actual interest rates. (This is safe to do because checking your loan rates doesn’t require a “hard” credit pull. LendingClub.com doesn’t ask for your social security number, and they’re not looking at your credit report.)

If you have debt, it makes sense to want to pay it off as quickly as possible. You can preserve your credit rating and save thousands on interest by making on-time payments. But in some circumstances, paying debt collectors is not the wisest financial move. By the time debt collectors phone you, your late payments have already been reported to the credit bureaus. Making payments — especially if you can’t pay off the debt in full — extends the amount of time a late payment will appear on your credit report.

There are other things you should know, too, when you’re getting ready to pay off debt through a debt collection agency. Follow these do’s and don’ts to protect your money, your identity and your credit rating.