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RateSetter review

If you're thinking about saving or borrowing through a peer-to-peer lending website, read our in-depth RateSetter review.

In this article
What is RateSetter? How does RateSetter work? How quickly can I get my money out of RateSetter? Borrowing terms
What do RateSetter's customers say about them? Alternatives to peer-to-peer websites Get top money-saving tips from Which?

What is RateSetter?

RateSetter, like its main competitor Zopa, aims to make peer-to-peer investing as simple as possible.

The site automatically allocates your money both people and businesses looking to borrow, 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 peer-to-peer should be thought of more as an investment, not as a savings product.

Is peer-to-peer investing right for you?

Peer-to-peer lending involves considerable risks, and several platforms have collapsed in recent years. Be aware:

  • Peer-to-peer platforms are not protected by the Financial Services Compensation Scheme
  • Returns are not guaranteed, and past performance does not serve as a reliable guide
  • Contingency funds can't be relied upon
  • You could face long waits to withdraw your money 

If you don't want to take risks with your money, opt for a savings account.

If you're happy to take risks whilst investing, make sure you have a balanced portfolio.

How does RateSetter work?

RateSetter offers three investment options.

  • Access - 3% advertised rate, with no fee to release your investment early
  • Plus - 3.5% advertised rate, with an early release fee of 30 days of interest
  • Max - 4% annualised rate, with an early release fee of 90 days of interest

All rates are after fees but before tax. The minimum investment with RateSetter is £10, and you can invest in either a general 'everyday' account or in RateSetter's Innovative Finance Isa, where returns are paid tax-free. 

How quickly can I get my money out of RateSetter?

Instant access to your money is not guaranteed.

Ultimately your loans will need to be sold to other investors before you can get your money.

RateSetter claims that, since 2010, investors have been able to release their investment within 24 hours on average.

Watch out for the above-mentioned early-access fees that apply to some plans.

Borrowing terms

  • Minimum amount you can borrow: £3,000
  • Maximum amount you can borrow: £35,000, depending on personal circumstances
  • Borrowing term: 1 to 5 to years, depending on personal circumstances
  • Can loans be paid off early? Yes, and without any penalty fees

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 the 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.

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