You've got until 3rd July to bag a top rate on your savings thanks to the latest Zopa Rate Promise.
Zopa’s latest Rate Promise, offering savers the chance at a guaranteed return of 5.1%, comes to an end this week.
The peer-to-peer lender has run a series of Rate Promise promotions this year, offering a fixed return for savers who lend their money through Zopa. If you want to take advantage of this latest deal, you’ve got until midnight on 3rd July.
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How the Rate Promise works
These Zopa deals work like a fixed rate bond in that the rate you get is guaranteed, which is not usually the case with peer-to-peer deals.
With this latest Rate Promise, if you lend your money over five years you’ll enjoy an average return of 5.1%. Your money will be split into chunks which will be lent to many different borrowers on Zopa, in order to minimise the danger of any defaults. So while some money may be lent at more than 5.1%, some may also be lent at a lower rate. But overall you’ll get a 5.1% return.
[SPOTLIGHT]If you lend over three years, you can get a rate of 4% guaranteed.
You can lend anything from as little as £10.
These rates take the annual lender fee into account. However, if you were lending on Zopa before August 2008 or are classed as a founder lender, then you get an even better rate because of the smaller annual lender fees you pay.
Here’s how the different rates on offer look.
|
Term |
Rate for members that joined after Aug 2008 |
Rate for members that joined before Aug 2008 |
Rate for founding members |
|
5.1% |
5.6% |
6.1% |
|
|
4% |
4.5% |
5% |
Is your money safe?
Saving – or rather, lending – with a peer-to-peer site is not quite the same as sticking your money into a savings account with a bank. While peer-to-peer sites are now regulated by the Financial Conduct Authority, they are not protected by the Financial Services Compensation Scheme (FSCS). The FSCS ensures that the first £85,000 you deposit with a protected financial institution is guaranteed, even if the bank goes under. That particular safety net isn’t in place for Zopa and other peer-to-peer sites.
That said, the big peer-to-peer sites have all taken steps to ensure your cash is secure as possible. With Zopa, there is now a Safeguard fund – which currently holds over £4 million – to cover you should things go horribly wrong.
How Zopa’s deals compare
The best five-year fixed rate bond from a mainstream savings provider comes from Vanquis Bank, which is paying 3.11% on deposits from £1,000 at the moment.
Meanwhile, the top rate on a three-year fixed rate bond comes from both Aldermore Bank and ICICI Bank, both of which pay 2.70% on deposits of £1,000 or more. So Zopa is clearly offering a better deal.
However, some peer-to-peer lenders offer higher rates over the same time periods, though these rates are not guaranteed. For example LendingWorks is currently offering 5.4% over five years or 4.1% over three years, while RateSetter is offering 6.4% over five years and 5% over three years.
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New ISAs: what's changed and top rates