Zopa's latest Rate Promise ends on 4th August, so time is running out to get a fixed rate of 5.2 % on your savings.
Since the start of the year, Zopa has launched monthly Rate Promise promotions, offering savers the chance to get a fixed rate on their investments.
How the Rate Promise works
Normally when you lend on Zopa or any other peer-to-peer site, the return you get on your cash is variable, depending on the credit profile of the borrowers you are lending to. That's not the case with the Rate Promise, where the return is fixed.
Every saver who joined Zopa after 2008 will have a guaranteed 5.2% on returns over five years if they lend between now and 4th August. Any amount that the lender gives will be distributed among credit checked borrowers, some at a rate a little higher than 5.2%, others at a bit less. The higher number of borrowers helps to reduce the chance of defaulting on the saver’s loan, though the actual default rate on Zopa is negligible.
Savers can lend a minimum of £10 and still get the 5.2% rate, just as long as they do so before midnight on August 4th.
If you joined Zopa before August 2008, you could stand to earn 5.7% on your savings in this period and founder members get a whopping 6.2%!
|
Term |
Rate for members that joined after August 2008 |
Rate for members that joined before August 2008 |
Rate for founding members |
|
5.2% |
5.7% |
6.2% |
|
|
4% |
4.5% |
5% |
Is your money safe?
Although it’s not your typical bank or building society, Zopa has taken measures to keep your cash protected in the form of a Safeguard fund - which currently holds over £4 million - to cover savers if anything should go wrong. It’s also regulated by the Financial Conduct Authority.
On the other hand, it isn’t covered by the Financial Services Compensation Scheme (FSCS). The FSCS makes sure that the first £85,000 you deposit with an approved financial institution is safe, even if the bank goes bust.
How Zopa shows up traditional savings accounts
Here’s how returns on Zopa look when compared to popular five-year savings accounts, returns-wise.
|
Bond |
AER |
Minimum deposit |
|
3.25% |
£1,000 |
|
|
3.10% |
£1,000 |
|
|
Shawbrook Bank Five Year Fixed Rate Bond |
3.10% |
£5,000 |
|
FirstSave 5 Year Fixed Bond 8th Issue |
3.08% |
£1,000 |
|
Skipton BS Fixed Rate e-Bond |
3.00% |
£500 |
|
BLME Sharia’s Compliant Premier Deposit Account |
3.00% |
£25,000 |
|
Progressive BS Limited Issue Five Year Fixed Rate e-Bond Issue 2 |
3.00% |
£500 |
|
Tesco Bank Fixed Rate Saver |
3.00% |
£2,000 |
|
Monmouthshire BS Five Year Fixed Rate Bond- Issue 1 |
3.00% |
£25,000 |
As you can see, Vanquis gives savers the highest return, but it’s almost 2% lower than what you can get with the Zopa Rate Promise.
As far as what the peer-to-peer market has to offer, RateSetter is offering 6.4% over five years and 5% over three years while LendingWorks is returning 5.6% over five years and 4.1% over three years.
Compare savings accounts with lovemoney.com