Anybody who has paid attention to interest rates could tell you that they’ve been nothing to write home about in recent years. With the Bank of England Base Rate at 0.25% that looks to be the case for some time yet. So it’s great that you can make over 7% on your money with RateSetter.
Who are RateSetter?
RateSetter is a Peer-to- Peer (P2P) lender, matching those looking to invest their cash with business, property developers and individuals looking to borrow. As the banks are cut out of the process investors receive better rates on their money whilst borrowers get cheaper loans.
How does it all work?
At the time of writing investors can receive up to 4.8% by putting their money into RateSetter’s 5 year market. Rates do change regularly so be sure to check the site when clicking through one of the links in this post.
There are no fees charged for lending your money as RateSetter, which is great news for your returns!
Is it just the same as a savings account?
No. As the saying goes “more risk, more reward”. Although some P2P accounts may have the look and feel of a savings account they are definitely not. They are not covered by the Financial Services Compensation Scheme (FSCS). In short, FSCS will not bail you out if you lose money due to a loan going bad or the P2P lender getting into trouble.
So what protection does RateSetter have?
It has its Provision Fund, which is funded by charging borrowers a risk-adjusted fee. It has prevented any of the 53,055 who’ve lent with RateSetter so far from losing a penny. Essentially, what the Provision Fund does is spread the impact of any bad loans across all investors, making returns more predictable.
As mentioned before the fund has done its job so far. Nonetheless it is not a guarantee that losses will not ever occur in the future.
How do I earn over 7% on my money?
RateSetter will pay a £50 bonus to new customers who invest at least £1000 in its rolling, 1 year and 5 year markets and keep it there for at least a year.
The bonus is paid at the end of the 1 year period and is paid directly into your RateSetter account.
Clicking on the RateSetter links in this post will take you to the sign up page for the £50 bonus.
So back to what you need to do…
- Click one of the links in this post to sign up.
- Invest £1000 in any of the rolling (1 month), 1 year or 5 year market.
- Keep it invested for 1 year.
So for example if you invested £1000 in RateSetter’s 1 year market, currently paying rates of 2.5%. You will also receive the £50 bonus if you kept it there for the qualifying one year period.
£50 is 5% of the £1000 plus the 2.5% gives you a 7.5% return!
A final note… Given the additional risk involved with P2P lending, as with other financial investments, you should never invest more than you could afford to lose. So if the investment has you dipping into your Emergency Fund it may be something to try at a later date.
Have you tried lending your money via P2P? What were your thoughts and experiences? What other methods are using to beat low interest rates?
Looking for other ways to make money? See how you can earn money in your free time with MintVine.
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