Nearly half (48%) of Moneywise.co.uk readers use peer-to-peer (P2P) lending in a bid to earn higher returns on savings, our latest poll results reveal.
This is an increase from 39% of Moneywise users who said they used P2P lending in August 2016, and 33% who said the same when we asked in February 2016.
The number of Moneywise users aware of P2P has also risen. Just 4% said they’d never heard of P2P lending in our most recent poll, compared to 6% who hadn’t heard of it last August, and 9% who hadn’t heard of it last February.
P2P lending websites match savers with borrowers. Savers then effectively loan their money to borrowers, earning interest on top.
The main attraction is that P2P lending typically offers higher interest rates than traditional savings accounts – you can also now do it via tax-efficient Innovative Finance Isas.
However, unlike cash savings, which are generally protected up to £85,000 per financial institution by the Financial Services Compensation Scheme (FSCS), P2P investments aren’t protected if something goes wrong - unless you were mis-sold by an adviser and the sale meets a number of other criteria (see fscs.org.uk for more on this).
It could be for this reason that around the same number of readers believe P2P isn’t for them, with 21% saying it’s not for them in our latest poll result – the same percentage as in February 2016. 23% said it wasn’t for them in our August 2016 poll.
The three pie charts below highlight the key differences between savers’ views on P2P lending in February and August 2016 compared to now (May 2017). Click on the images to enlarge.
Moneywise May 2017 peer-to-peer lending poll
Moneywise August 2016 peer-to-peer lending poll
Moneywise February 2016 peer-to-peer lending poll