LendingClub Introduces Cash-Back Reward For Personal Loan Borrowers

When it goes well, personal loan repayment is boring. You have your funds, and you’re simply whittling the balance down, one installment payment at a time.

LendingClub, however, recently announced an innovation that should improve the experience for its customers: If you enroll in its LevelUp Checking account, you get 2 percent of your monthly personal loan payment as cash back each month, as long as you pay on time. That might not sound like a lot — and we did the math to find out — but there are no reward limits. The cash back could be significant if you have multiple LendingClub loans or a very large balance.

Also, consider that for the average personal loan repayment, LendingClub’s cash-back bonus is almost five times more valuable than other lenders’ closest facsimile: an interest-rate reduction (typically of 0.25 percentage points) for enrolling in automatic payments or having a bank account with the lender.

That might explain why this is a true first.

“We spent a lot of time looking,” LendingClub chief customer officer Mark Elliot tells Bankrate. “We haven’t seen anybody doing this.”

Personal loan benefits are typically few and far between

If you borrow a student loan from some lenders and you graduate on time or with a certain GPA, they might reduce your principal balance. And if you take out an auto loan, you might qualify for a promotional APR or cash-back bonus upon buying your car.

The pros and cons of personal loans, however, are largely the same among lenders and don’t change as often as other financial products. Heck, we’ve even pointed out the fact that origination fees still (unnecessarily) exist.

That’s partly what makes LendingClub’s new feature so novel. Nobody else is doing it.

LendingClub, which also offers a high-yield savings account, sees its checking account’s features as a way to reward their borrowers on a regular basis — and offer credit card-like rewards with lower risks of accumulating debt.

“We want to [incentivize] those really good financial behaviors and not just have our customers feel like, ‘OK, I’m paying this loan on time,’ but ‘I’m getting rewarded for doing the right thing,’” LendingClub’s Elliot says. “Obviously, it helps your credit score and it helps you qualify for loans in the future and all those things. But … when we tested this with our members, their eyes lit up. They were like, ‘Nobody’s doing this in the industry, this feels like it really recognizes me for taking all of those steps.’”

Just how valuable is LendingClub’s cash-back offer?

Say you have the average personal loan: $6,200 with a 21.8 annual percentage rate percent on a three-year repayment term, according to early 2025 TransUnion data. An on-time payment would net you nearly $5 each month. Again, larger balances (or multiple loans) could multiply the reward.

The most similar personal loan perk offered elsewhere might be an interest-rate reduction (typically of 0.25 percentage points) for enrolling in automatic payments or having a bank account with the lender.

To compare the value of these benefits, let’s use the same $6,200 loan and compare cash back with LendingClub versus savings at SoFi, another major online lender.

While even a slightly lower APR lasts for the duration of your repayment and offers nominal savings, it doesn’t offer the same flexibility. After all, you could use a cash-back award to pay off your personal loan faster, but it could also help you build an emergency fund or accomplish another savings goal.

OK, but should you borrow from the financial institution where you bank?

The best personal loan for your situation likely has the lowest interest rate, best available repayment term and the least fees. Still, if multiple lenders quote you similar loan offers, features like LendingClub’s could be a tie-breaker.

Just don’t expect many personal loan lenders to copy-cat this new invention. Elliot, who has long worked in the financial services industry for firms like Capital One, J.P. Morgan Chase and TIAA, is skeptical. For one, many lenders aren’t banks and can’t offer checking and savings accounts. For another, even those that do might not want to lose money on paying out bonuses.

“And so, as a result, when you look at a product like this, you say to yourself, ‘All right, well, 2 percent back for on-time loan payments, that’s a cost to the company,’” Elliot says. “The worst thing that happens is a lot of our members get it, and they’re all paying [their loans] on time, and we’re spending a lot of money on rewards… but that would be a great outcome for our members.”

As a consumer, having multiple accounts under one roof, even a digital one, means it’s easier to shuttle cash between them with seconds-long transfers. The question then becomes whether there’s any fly in the ointment. Most notably, if you default on loan repayment, it’s also easier for the financial institution to seize your liquid cash if it’s already in their vault.

For his part, Elliot says this isn’t a common practice at LendingClub — and is avoidable.

“Our approach is to try to help the borrower and try to figure out ways to solution with them,” he adds. “Like every borrower or lender, we do loan modifications for borrowers in trouble. And we have a lot of procedures and processes and analytics around, ‘How can we help the borrower?’”