What is peer to peer lending?
Peer to peer lending (P2P) is a way for people to lend money to individuals or businesses. You as a lender - receive interest and you get your money back when the loan is repaid. You find P2P is between savings and the stock market, though is much riskier than savings account.
P2P websites work like a market place, they bring people together or businesses that want to lend money with those who want to loan. It is a way for borrowers to get funding without going to the banks. On some websites, any money you lend out is automatically divided between lots of borrowers. But with others, you can choose who you would like to lend your money to.
With RateSetter, when looking to invest, you have 3 options. First is the Access which offers a 3% yield, next is the plus offering 3.5% and last is the max which offers 4%. They offer two accounts, one being the basic Everyday account and a ISA account.
A little more detail of how RateSetter works
"We select borrower loan requests that we price based on our credit management expertise that we have built over the last 10 years. We price loans based on the creditworthiness of the borrower, the term and the amount.
As an investor you select the interest rate you would like to earn and we match your money with the next available borrower request." - RateSetter
They offer a referral program where you can invest £10 and receive a £20 to invest also.
If interested, click here to find out more.
When looking to withdraw money from RateSetter instant access is not always guaranteed but to date investors have released their investments within 24 hours on average.
Staying protected with RateSetter
Rate setter isn't FSCS protected but has came up with another way of protecting their investors through their provision fund buffer - click here to find out more
I personally have been using RateSetter for 2 months now and finding the experience great. The great thing about RateSetter is the amount you can invest. Most other P2P lenders have a minimum of £1000 but it is only £10 with RateSetter, making it incredibly easy to start another income stream and to diversify your portfolio.
Coming unto the end of the 2nd month and I have received £0.02 interest on £40. I think this is a great way to allow passive compounding as they invest the money back into the market once the loan is paid back.