Lenders Unite: Where is our Interest? | P2P Lending, Peer to Peer Lending, People to People Lending

#12million – My Journey to Financial Freedomon 02.12.07 at 5:43 am

Carnival of Personal Finance #87 in Rio…

Welcome to the 87th edition of the Carnival of Personal Finance. Just in time for the real “Carni’val in Rio” this week’s edition is ready to party!! So grab a cocktail and lets get started with the parade. First up,……

#2Carnival of Personal Finance: Online Lending (and Earning) Edition | Online Savings Blogon 02.12.07 at 4:00 pm

[…] RateLadder takes a look at the lending angle, wondering why money currently being lended doesn’t earn interest. Once money (it takes 4 business days) is in account interest is not earned. This includes any money not in loan bids, any money in a non winning loan bid, any money in a winning loan bid, and money in a loan pending review. Just to be clear I am not asking for faster, quicker, or less through loan reviews. It can anywhere from 2 days to 2+ weeks once a loan is closed until it is funded. So who is earning interest for those extended periods? is earning interest on OUR the float! […]

#3DCS on 02.27.07 at 12:55 pm

My personal belief is that it’s Wells Fargo (not Prosper) earning interest on our money while it sits, and their ability to do that was made part of the deal to keep Prosper’s costs down.

Of course, that’s just my theory. :)

#4Kevinon 02.27.07 at 5:33 pm

Prosper is making money even indirectly by your theory.

#5David on 03.02.07 at 5:50 pm

I don’t believe Prosper is making money on our idle funds but rather they are saving money on substantial processing fees that would be charged by Wells Fargo for supporting all the ACH activity. The account is probably on Account Analysis and is assigned an Earnings Credit that is paid to Prosper but used to offset fees that would be charged on the account.

It’s a huge benefit their gaining on our idle funds!

#6Kevinon 03.02.07 at 7:40 pm

Both Wells Fargo and Prosper benefit significantly on our money.

Do you think Paypal is able to pay 5% because they have 1 (maybe 2) orders of more magnitude more money in the system?

#7Scott on 03.12.07 at 5:39 am

I agree that Prosper needs to pay interest.
However, you’re not comparing apples-to-apples here.

PayPal does NOT pay interest on funds in an FDIC-insured pooled account. To earn interest through PayPal you have to elect to use a money market sweep account, which is not FDIC insured. Funds are moved from this account to the pooled account automatically as needed to cover any payments you initiate.

That said, I hope Prosper does come up with something similar, and soon. I’d prefer to keep my money at 5% in a minimal risk money market account than at no risk in a non interest-bearing pooled account.

#8SteveinHelena on 05.10.07 at 10:10 am

if you really think this is a problem, figure this into your computations on the return you expect to get from the loans you make. I guess we all could complain about this or that, but remember, Prosper is the first of this kind of lending, there will be others and as the industry develops you will see competitive programs. In the mean time, do what you choose and quit complaining, we are all here voluntarily!

#9Kevinon 05.10.07 at 1:10 pm

I am not complaining. I am the first to admit that Prosper is lender beware and that I am here of my own free will…
I fundamentally think Prosper would be better off paying interest and that it won’t cost them anything. If their account is on analysis (it is from what I have been told) Then wells fargo is going to leave them on analysis even after they skim off 3% or so in interest. As wells fargo makes ROA of 7-12%.

#10Lazy Man and Moneyon 01.16.08 at 1:37 pm

If Prosper pays interest it costs them the relationship with Wells Fargo. If that goes sour, the result is it’s going to the end customer. Perhaps there’s a money transfer or something similar added. You don’t just get something for nothing.

#11Kevinon 01.16.08 at 1:47 pm

The float is worth a lot more to Wells Fargo than the paltry 3% it would take to make my VERY happy. I am not asking for the highest high interest savings rate. Find a middle ground.

#12» Can Prosper Pay Interest?on 03.01.08 at 2:49 pm

[…] Please note the title (vs Should Prosper Pay Interest). One of my most viewed articles at RateLadder is Lenders Unite: Where is our Interest?… […]

#13Prosper Site Update — Nationwide 36% Except Texas and South Dakota : Rate Ladderon 04.15.08 at 12:11 am

[…] and Quicken — The workable solution for playmates that don’t get Lenders Unite: Where is our Interest?RateLadder Top ReferrersProsper IRR Lender “Game”Adam Nash Merged with RateLadder to form the Ideal […]

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