Peer-to-peer website Lending Works is offering a 1% cashback bonus to new members who lend during June.
The deal is exclusive to loveMONEY and its partners including BT.com, so you won’t be able to get this cashback bonus direct from Lending Works.
Lending with Lending Works
Lending Works is a peer-to-peer site, which means you can lend through the site to other individuals and get a decent return in exchange.
You can currently lend over two different terms. Lending over three years will bag you a rate of 5.1%, while over five years you’ll enjoy a return of 6.2%.
How safe is my money?
Lending Works positions itself as the safest peer-to-peer lender around, with three layers of protection for the money you lend.
First of all, borrowers have to go through strict underwriting in order to be approved for loans. That cuts down the chances of any missed payments.
Should there be any missed payments, there is a Reserve Fund in place which can be used to cover those defaults.
That’s why lenders on the site have never missed out on a penny that they were owed to date. The Reserve Fund comes from fees paid by each borrower.
Finally, there is insurance in place to protect lenders in the event of fraud or cybercrime, loss of employment among borrowers, and accidents, sickness or death.
It’s worth remembering though that while peer-to-peer sites are regulated by the Financial Conduct Authority, the money you lend is not subject to the protection of the Financial Services Compensation Scheme. You will get a better return by lending through a peer-to-peer site than from a traditional savings account, but there is inherently more risk involved too.
[Related story: Peer-to-peer to become more attractive over next year]
How do I get the cashback bonus?
The 1% cashback bonus runs until midnight on 30th June. To get it, you need to transfer in and make loan offers through the Lending Works platform for £10 or more. Your bonus will then be transferred into your Lending Works wallet by 10th July.
To qualify you must register as a lender via a special page on the Lending Works site, not the main Lending Works website.
How LendingWorks compares
So how does the Lending Works offer compare to other peer-to-peer sites and traditional savings bonds?
If you are happy to use a peer-to-peer site, then over five years the best rate around comes from the RateSetter Five Year Income account, which pays 6.7% fixed. Meanwhile Wellesley & Co. is paying 5.5%, and Zopa is paying 5.1%.
Over a three-year term RateSetter is paying 5.3%, Wellesley & Co. is paying 4.75%, Landbay is paying 4.4% and Zopa is paying 4%.
If you want to stick to a traditional savings bond, then you won’t do any better than the 3% on offer from UBL. UBL also offers the best three-year rate at 2.45%.
Compare savings and peer-to-peer returns