Peer-to-peer lending with RateSetter (AD)

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AD. Since becoming debt-free a few years ago I haven’t made a huge amount of effort to make my money work harder for me, at least not until 2018. I have the majority of my money in premium bonds, as we are going to be using the bulk of our savings to purchase a house hopefully very soon. There are a vast array of ways to invest money, and today I want to talk to you about peer-to-peer lending, and RateSetter in particular.

Peer-to-peer lending with Ratesetter (AD)

What is peer-to-peer lending?

Lending platforms, such as RateSetter, bring together people who want to invest their money with people who want to borrow money. This is peer-to-peer lending summed up in one sentence.

Banks have used deposits from customers to lend money to borrowers for decades. Now, with peer-to-peer lending, investors can receive returns that exceed the rate of inflation.

Who are RateSetter?

RateSetter was founded in 2010 to give people the chance to earn more from their money. Since its launch Ratesetter Investors have lent over £3.2 billion and earned around £130 million in interest. To date, there have been more than 600,000 borrowers and investors.

RateSetter, the UK’s most popular peer-to-peer lending platform, matches investors and borrowers together. Investors can earn interest each month.

What are the investment options with RateSetter?

RateSetter has two types of investment account types available. There is the Everyday account, which allows you to invest in three different markets, or there is the Innovative Finance ISA. This is the same as the Everyday account but returns are tax-free. Individuals can have an IF ISA with RateSetter alongside a cash and/or stocks & shares ISAs. Three different markets are available for investors from RateSetter and the main differences are the rate being offered and the fee that you pay to access your money, should you want to.

Rolling market – 3.4% annualised rate with fee-free access

1 Year market – 4.3% annualised rate with a 0.3% fee to access money early

5 Year market – 5.4% annualised rate with a 1.5% fee to access money early

(rates are correct from the RateSetter website for June 2019)

The RateSetter Provision Fund

From time to time a borrower may miss a repayment on a loan. The RateSetter Provision Fund has been set up to ensure that a lender is automatically reimbursed if a borrower misses a payment. RateSetter grows the Provision Fund by using part of the interest charged to borrowers. Borrowers pay an agreed interest amount with part of the interest going to the lender and part going directly into the Provision Fund. This helps to ensure that the Provision Fund grows with the overall portfolio of investments. The Provision Fund has a 100% track record and over 9 years no investor has lost a penny. Remember, past performance is not an indicator of future results. 

Do you need lots of money to invest in peer-to-peer lending?

No! Not at all. This is what I am most excited about. I had made the assumption that you would need to have £1,000s available to invest. You can invest from just £10! I love that you can use such a small amount of money to try them out. Also, if you have a little more to invest then RateSetter currently have a £100 bonus when £1,000 is invested for 1 year. Learn more about the RateSetter bonus and the terms.

As with many investment platforms, you can lose some or all of your money. Your capital and interest are at risk. No FSCS protection. I am not qualified to give financial advice and all opinions in this post are my own.

21 Responses

  1. Kelly July 8, 2019 / 9:51 pm

    Oh this is such a wonderful idea and I think so many people would really benefit from it! I never knew anything like this existed.

    • katykicker July 9, 2019 / 8:25 pm

      So glad I could help educate you x

  2. Kizzy July 9, 2019 / 4:56 am

    This is really interesting. I never knew schemes like this existed.

    • katykicker July 9, 2019 / 8:26 pm

      It is a great way to try something different when it comes to investing money. (Capital is at risk of course)

  3. Kate Tunstall July 9, 2019 / 5:31 am

    I clicked because I was intrigued and I’m glad I did! Very interesting and I was already leaning towards the 5 year for some savings till I read the last couple of sentences! I’ve forwarded to my husband though and might brave one of the schemes. Thanks for sharing x

    • katykicker July 9, 2019 / 8:27 pm

      You can invest from as little as £10 but of course capital is at risk, so always something to keep in mind!

  4. Marie July 9, 2019 / 7:28 am

    This is interesting, I’m always looking to make my money go further (especially as ISA rates seem to be going down by the day!)

    • katykicker July 9, 2019 / 8:27 pm

      Me too!

  5. Jennifer Gladwin July 9, 2019 / 11:31 am

    I had no idea what peer to peer lending was about! It’s great you can start out with such a small amount.

    • katykicker July 9, 2019 / 8:27 pm

      So glad I could teach you something new!

  6. Talya July 9, 2019 / 2:50 pm

    This is a really interesting concept and not one I’ve thought about before – off to check it out!

    • katykicker July 9, 2019 / 8:30 pm

      I hope you found it useful! x

  7. A Mum Reviews July 10, 2019 / 8:49 am

    Very interesting! I’ve never heard of it but it makes sense!

  8. Donna July 10, 2019 / 10:23 am

    This was really interesting – I’ve never heard of this sort of lending/investment before, thanks for introducing me to it x

    • katykicker July 14, 2019 / 8:14 am

      You’re so welcome x

  9. Kelly July 10, 2019 / 12:03 pm

    Wow what a great idea. Good returns AND you are helping people.

    • katykicker July 14, 2019 / 8:14 am

      Thank you x

  10. Laura Schwormstedt July 11, 2019 / 12:18 am

    I find the whole peer-to-peer lending concept really interesting and have learnt a lot from this post, thanks for sharing

    Laura x

    • katykicker July 14, 2019 / 8:14 am

      You’re so welcome. Thanks for your comment x

  11. Lara jarvis July 15, 2019 / 3:34 pm

    Sounds very intriguing! We need our savings to be accessible for when we eventually can buy a house – so this is definitely something we could benefit from, thanks for sharing! x

    • katykicker July 16, 2019 / 12:24 pm

      Glad you found it useful x

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