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LC offers fixed rate-fixed duration loans where the CC zero interest transfers normally have a 12-18 month fixed rate then jump to XX%, some people would want the security of knowing what it will cost them and dont want to risk having to find a new CC with zero interest transfer in a year. This might be sub-optimal but having talked to friends this is the thought process. Also LC loans can also be for things other than debt pay off, ie some people barrow money to redo a kitchen or have a wedding - stupid- maybe - but people do it.
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may be, but these are few and far between - hardly a validation of LC as place for common low risk , high credit score, low default risk borrower to go, it is best not to delude yourself thinking that this is a common and normal scenario. LC (and similar experiments) are very high risk simply because normal or low risk individual is unlikely to go to places like that as that is financially stupid.
same argument could be used for commodity futures - yes, they could be used to manage forward price risk and were originally created for that purpose but now vast majority of that is pure gambling by people who never , ever, intend to take delivery.
similarly with options, yes - in theory it could be used for risk management, while absolute majority of "traders" are doing nothing but gambling. every time I hear "trader would take a position" (on say binary options) it is nothing but a fancy speak for placing a bet on black or red.
in short, every financial instrument mentioned could have originally been created for a valid purpose but as time passed, that became vast minority of the use, fool's money rushed in, and it is used primarily as gambling tool.
from my financial services experiences - people who trade derivatives get burned, there are some exceptions explainable by luck but majority of them burn out their accounts as playing zero sum game where each entry costs money (commission) will guarantee to enrich your broker and eventually wipe you out. the more leverage you take (Reg T margin or now portfolio margin), the faster you will wipe out..