Just noticed today that the Zopa US Site has launched… I am not sure I like it…
The FDIC insured CD is a decent rate 5.1% (5.15% at Etrade is the highest 1 year CD I could find on Bankrate). But why would I reduce my yield just to help someone I don’t know?
So I tried to sign up for a $500 CD. No luck… Something broke. The error said they would get back to me. Oh well…
Regular reader ChrisFS had this to say…
I just visited the Zopa site, since they launched today. Their concept is very different from Prosper and I can’t see myself putting any money in it.
Lenders get a 5.1% CD and then are asked ‘help’ a borrower by contributing a portion of their interest to help pay off the borrowers loan. The more you help the lower your APY. So by helping someone else you are reducing your own gain. That’s the complete opposite of Prosper (and Lending Club), where for some risk you get a better than CD rate and borrowers get a better rate than banks.
I’m astounded that Zopa went that way. I haven’t checked their cut-off for borrowers, but if Zopa set the credit limit high (A-C), then the only people who are really benefiting are Zopa and credit unions off the fees and rate spreads.
I thought Zopa was going to be the killer app of the P2P world, but apparently they are going off completely on their own.
Prosper continues to have only Lending Club as it’s competition.The other sites, Microplace, Kiva, are charity sites.
Wow still stunned, if I want to reduce my income by helping others, I’ll contribute to organizations that’s tax deductible or at least helps a large group of people (Habitat for Humanity, etc).
Social finance is supposed to be a two way street.
I agree. But 5.1% is a decent 1 year CD rate. If I were interested in a 1 year CD I would think about a Zopa CD.
Check out my Zopa Profile: RateLadder on Zopa
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8 comments ↓
I always thought that this model Zopa is using would be good for charities…but *real* charities, not people who didn’t pay their bills!
I’m sticking with my 22% return on Prosper!
DaveP
I completely agree… Although if you able to maintain the 22% ROI number for 3 years will you tech me your secrets?
I would like to think that a 12% long term ROI is possible. That is my strech goal.
Your lendingstats.com Prosper ROI is 3.86% which is less than the 5.1% Zopa is offering.
http://www.rateladder.com/2007/12/03/rateladder-prosper-irr-1212007-132/
My potential is much higher than 5.1%… Zopa locks you into 5.1%… If I wanted a CD I would find that interesting… I will probably buy a CD with Zopa just to try.
My LendingStats ROI at the exact moment (7:30 am pst 12/14/2007) is 5.14% Eric’s CC is 9.22%. Both higher than 5.1%
no fair. I quoted that ROI 9 days before it went to 5.14
but even with the new ROI, do you think .04% is worth the added the risk?
Again my ROI is a forward look at my loans I have made in the past. Adjusting my strategy I think I can do much better. An the concept I am hanging my hat on is potential… With Zopa there is not potential. It is what it is.
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