How to Earn Over 7% on Your Money with RateSetter

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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…

  1. Click one of the links in this post to sign up.
  2. Invest £1000 in any of the rolling (1 month), 1 year or 5 year market.
  3. 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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3 Comments

  1. May 9, 2017 / 1:15 pm

    That’s interesting that the risk is spread out among all investors. Do they explain what could/would happen if the provision fund is depleted for whatever reason? Maybe a major downturn followed by more defaults? Would those extra loses be spread out among all investors proportionally?

    Peer-to-peer lending is a neat idea and could make up a small portion of someones portfolio but like most investing diversification is key to reducing risk.

    • msmoneymaximiser
      May 10, 2017 / 10:34 am

      Hi Owen.

      According to Ratesetter as of May 2017 if losses increased significantly:
      The Provision fund would reduce in value (it current value exceeds expected losses).
      If the provision fund ran out then a reduction in interest rates would then be used to cover losses (investors capital intact).
      Losses would need to triple before investors enter capital loss territory.
      At losses of 14% (5 times the current expected default rate) investor would lose 4.8% of money put in (4.8p for each £1).

      The numbers are regularly updated by RateSetter to give the latest view.

      I completely agree with your point on diversification and as with all investments P2P has its risks which may not be to everyone’s taste.

      For those who want to dip their foot in the water and give it a try, RateSetter dohave a Rolling option (1 month lending) which can allow them to have their money paid back sooner. If they feel more comfortable they can then progress to longer terms.

      • May 10, 2017 / 1:57 pm

        Interesting, that’s great that they provide that level of transparency. Sharing the risk of default is certainly a smart decision and definitely a unique feature for a P2P lender. Thanks for the reply.

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