Ratesetter is a relatively new site in the field of peer to peer lending and follows sites like Zopa (UK) and Lending Club and Prosper in the USA. It is a relatively new way people like to invest their money as opposed to in the stock market. However there are some major differences. I will outline what I like about the site and what I dislike about it. Obviously there are pros and cons with everything.What I like about RateSetter
I can list several great things in this RateSetter review about this P2P. Firstly I like the fact that you can deposit as little as £10 to get your lending experience started. I think it is a good idea to start with small amounts to give you the opportunity to see how the site works. Personally I find it extremely addictive and as soon as I get £10 lent out to borrowers I want to deposit more and start the lending process all over again.
Secondly I like the fact you can lend your money out for as short a time as a month. This is also a great way to experiment with lending and see returns on your money very quickly. However it is important to note that your returns will obviously be less if you lend your money for a shorter period of time. Initially I only lent my money to borrowers for a month. I liked getting my money back quickly. This may appeal to people who do not want to tie up their money for a long period of time.
It is an added advantage that you can see the average interest rate you will get for each loan term. I always aim towards the lower end of the interest rate so that I get my money lent out much quicker. I find the interest rates offered to lenders to be higher than those offered by Zopa.What I dislike about RateSetter This RateSetter review also takes into account disadvantages of the site. It is important to note that this is my opinion and not necessarily the opinion of others.
I do not like the fact that your capital is at risk. Basically this means that your money is not covered by the financial services compensation scheme. I have to be honest if my money was covered I would be investing much larger sums of money. Instead I only drip feed money into my RateSetter and Zopa account. I will not invest more than £100 a month into these types of sites as I prefer to stick to safer investments for now. Do you feel this is a valid point in this RateSetter review?
I will update this RateSetter review as my experience with the site broadens and I see how easy it is to reinvest funds in the future.