50 ways to boost your savings income: peer-to-peer lending

15 May 2018

From switching current accounts to seeking out dividend-paying funds, Moneywise rounds up 50 top tips to boost your income by making your savings work harder for you.

Here are four ways to boost your savings using peer-to-peer. See the our guide 50 ways to boost your savings income for the rest.

9. Become a lender

Lending to individuals via peer-to peer (P2P) lenders such as RateSetter and Zopa, in return for a fi xed rate of interest, is becoming an increasingly popular alternative to mainstream savings accounts. Zopa currently offers 4% a year on loans, while RateSetter offers 3.1% on rolling loans, rising to 3.7% on five-year plans. However, with P2P lending there’s no protection from the Financial Services Compensation Scheme (FSCS), so your capital is at risk.  Some lenders have provision funds or insurance to minimise risk if borrowers default, so check before taking the plunge.

10. Help business start-ups

Other P2P platforms specialise in loans to businesses, such as Funding Circle and Thin Cats, while Lendy offers loans to property developers. Projected returns for investors are higher than loans to individuals (Thin Cats promotes a rate of 7.8%), reflecting the greater risk.

11. Diversify to protect your income

As noted above, P2P platforms operate differently, so check whether you are lending to one individual or business or your money is being distributed between a number of borrowers. If the loans are not being diversified on your behalf, you may wish to spread the money you have to lend across a number of different borrowers to reduce your risk. You should also check if the loans are secured or unsecured.

12. Don’t pay any unnecessary tax

To ensure you don’t pay any unnecessary tax on your returns, you can hold P2P loans in the latest Isa to join the party, the Innovative Finance Isa (IF Isa). Most major P2P platforms now offer an IF Isa.

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