By Michael Trudeau
Article 2 of 6
If you're thinking about saving or borrowing through a peer-to-peer lending website, read our in-depth RateSetter review.
RateSetter, like its main competitor Zopa, aims to make peer-to-peer investing as simple as possible.
The site automatically allocates your money to borrowers and aims to cover any late repayments automatically and seamlessly through a compensation fund.
The rates on offer aren't as high as a site such as Funding Circle where you can take a more active role in choosing how to lend your money, but are exposed to borrower defaults.
But if you're looking for an experience that is almost as simple as putting money in a savings account, offering better returns for a little more risk, RateSetter could be for you - although remember per-to-peer should be thought of more as an investment, not as a savings product.
Ratesetter peer-to-peer lender details
- Minimum lend: £10
- Lending term: Rolling, one year, or five years
- Can I withdraw funds early? Yes, but your rate will be reduced to the nearest lending term - eg, funds in a one-year bond taken out after six months would revert to the rate you'd have earned if you'd used the rolling market rate.
- Rates of return on offer for lenders: Since launch, average rates have been 3.1% for the rolling market, 3.7% for one year and 5.9% for five years (after fees, but before tax. Rates checked 21 June 2017).
- Minimum amount you can borrow: £500
- Maximum amount you can borrow: £35,000, depending on personal circumstances
- Borrowing term: Six months to five years, depending on personal circumstances
- Can loans be paid off early? Yes, and without any penalty fees
|Ratesetter peer-to-peer lending satisfaction|
|Explanation of the risks|
|Variety of products available|
|Ease of use of the website|
|Clarity of information on the website|
Star ratings out of five show levels of satisfaction for each category. Hyphen indicates not enough responses to assign a star rating.
What do RateSetter's customers say about them?
These were some of the comments from members we surveyed who'd invested with RateSetter:
"You need to actively watch re-investments as market rate can be very low and if rate is set too high it can sit for ages uninvested."
"Their approach to bad debt provisions is good and explained clearly to prospective investors. Regular information on progress on my account."
"They have made investing very easy; it is no more complicated than a normal savings account."
Alternatives to peer-to-peer websites
If you're looking for a loan, it's worth checking out Which? Best Rate personal loans, too.
In almost all cases you'll want to build up cash savings (in Isas or savings accounts) before considering putting your money into a more risky investment such as peer-to-peer lending.
If you're looking for higher returns you might want to consider other investments.
- Last updated: July 2017
- Updated by: Michael Trudeau