Two days I purchased a Zopa CD right after the Federal Reserve cut the fed funds rate 75 basis points. I half expected Zopa to renege on the 5.1% that I signed up under, especially since Bank Rate not shows that a 5.1% 1 year CD is now the top yielding 1 year CD in the nation by almost 20 basis points as of this morning.
What was the process?
After signing up two days ago I waited. Late yesterday I got an email…
Subject: ZOPA | Your CD’s Ready – Action Required
Hi RateLadder,
Your Zopa CD application is almost complete.
You just need to log in to your account and formally agree to the final terms of your CD:
<link to click on>
Kind regards,
The Zopa Team
www.zopa.com=====================================================
Questions?Log on to your secure Zopa email account here:
<link to click on>
-or-
Give us a call at 1-888-TRY-ZOPA (1-888-879-9672) (weekdays, 8am – 6pm PT). We’d love to chat.
To ensure your privacy, reply to this email via the instructions above.
I immediately assumed they were going to reduce the rate. THEY DID NOT…. They honored the 5.1% and they are still showing 5.1% on their website… If you are looking for a 1 year CD there is no better place to get that CD at the moment. Zopa has a higher yield by 20 basis points than any other national CD!
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5 comments ↓
As I understand, Zopa CD has nothing to do with what we traditionally come to regard as CD and as such, isn’t linked to federal rates at all.
The money is simply lent out, P2P style, but the remaining interest spread is used paid to 3rd party for insurance and some of it paid to Zopa themselves.
So, the borrower probably pays 10% on that money you invested, 5.1% go to you, 2.5% go to insurance entity, to cover in case of default, and the rest goes to Zopa.
The percentages above are arbitrary, since I don’t know real numbers, but I think that the concept.
Now, personally, I generally rather assume the risk myself (and thus invest in Prosper.com), since knowing insurance companies are motivated to Make money (versus loose money), the risk must be worth the reward!
@Adi
You are absolutely right (and I agree with you on assumed risk), but I think you missed my point.
The Zopa CD is a traditional CD in that it is FDIC insured. FDIC insured 5.1% is the best deal going for 1 year CDs.
Ok, I spent some time reading through Zopa FAQs and what not, and I can see what you mean now.
I must have been confusing the concept with another P2P lender, since Zopa does simply give you FDIC insured CD.
They put interesting social spin on plain vanilla CD, neat!
Congratulations, that is a great rate. I am glad that it went through.
[...] few days ago I wrote about the Zopa CD being the best national cd rate at 5.1% after the federal reserve cut the fed funds rate by 75 basis points. RateLadder locked in the [...]
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