RateSetter – Peer-to-Peer Money Lending/Borrowing
TLDR/Summary:
Looking for a term deposit? Consider RateSetter.
RateSetter is a peer to peer lending platform. Think Airbnb, but for money. They are the only officially licenced peer to peer lending platform in Australia and are somewhat affiliated with Qantas.
The rates you see are expected to be higher than that of term deposits, and is completely market dependent.
Interest earned is taxed just like interest you earn from a regular term deposit or savings account.
RateSetter – Peer-to-Peer Money Lending/Borrowing
Are you looking for a term deposit to get a high interest rate on some extra money?
RateSetter could be an option for you. RateSetter is Airbnb for money.
Rather than looking to the bank to get an interest rate of 3.5% for 5 years, you could potentially be looking at:
- 1 month: 4.5%
- 1 year: 8.6%
- 3 years: 8.1%
- 5 years: 9%
What’s the risk, you ask?
Well, if you think back to when a lot of these peer to peer platforms/apps started out, I believe there was (understandably) a lot of apprehension. In reality, there still is – particularly from those unfamiliar with how they work. There were always questions such as:
- Is it safe? What if something happens?
- Why would I want a random driver driving me? (Uber)
- Wouldn’t it be better to stay at a licenced hotel? (Airbnb)
Nothing is risk free and no one could guarantee that nothing would happen whenever you jumped in a taxi/hotel either. Over time many of these concerns have noticeably eased off as the volume of people that have used these platforms/apps have increased. Anecdotal stories of their experiences have eased the minds of many new users.
To be more direct, the risk is probably that a borrower could run away with your money or/and could default. However, (I won’t be able to explain this bit particularly clearly) RateSetter have an “emergency fund” to dip into to repay you in case this does occur. They are also the only peer to peer lending platform officially licenced to operate in Australia and if it makes a difference, are affiliated with our national airline, Qantas.
I have personally used RateSetter as a lender of $1000 for the period of one year – primarily to take advantage of a promotion. I have no complaints about my experience and would not hesitate (much) to use them again. However, I do fully accept and understand the apprehension, especially if dealing with large sums of money. My lack of understanding of how safe your money actually is probably doesn’t help ease the minds of many either.
The purpose of this post was simply to raise awareness – that there are alternatives to term deposits and that there is an individual out there who has used RateSetter and got their money back + earned interest. I personally found the platform extremely easy to use and did not feel that my money was under threat at any point in time.
Just to be clear, RateSetter do not offer Term Deposits but offer interest to be earnt on money you lend through their platform. From a user point of view, it is quite similar to a Term Deposit but it is technically a different product.
Any questions/comments? Feel free to leave any comments!
