I was listening to Radio 4 on Saturday (yes, I really am getting old) and they mentioned a site called Zopa.com. It’s a site where you can borrow or lend money, and the best way I can think to describe it is by saying it’s similar to Betfair.
The site takes money from investors and divides it into jumps of ten pound loans and lends it out to people who apply for credit through the site. The people that apply have to pass a credit score, and if they fail to pay for any reason they suffer the same consequences as if they had borrowed from a bank. The plus side for anyone putting money in is that they get more money back than they would in a savings account, even taking into account the percentage lost when people default and don’t pay.
It’s an interesting idea in concept, and as such I’ve put £50 in to see what happens. Unfortunately the loans are repayable over 3 or 5 years, so it’ll be some time before I get the money back, and even when I do there won’t be a huge profit, but if I like how easy it is to watch and keep track of, I may start putting in a regular amount every month as a way of saving. At the moment, if I put any money in my savings account, I have a habit of transferring it to my current account and spending it.
When I leave work next month, I will have to stop paying into my Share Save scheme that I pay into every month. It works by saving your money every month and then allowing you to buy shares at a fixed price after three or five years, or taking the money you’ve saved up as cash.
It works for me simply because it’s money that I don’t have access to every month and therefore it accumulates quite well. It also comes straight out of my wages, so I never miss it when I get paid. I’m hoping that if I start putting money into Zopa regularly, it’ll work the same way.
I guess I could just open a seperate savings account somewhere, but that’d be too easy (!).