Should Senior Citizens Consider Peer-to-Peer Lending?
February 24, 2010
CD rates and savings account rates are at levels that make many people irritated. Senior citizens who have saved all their lives in anticipation of living off interest may be particularly irritated.
This anger is understandable. The federal government and the entire Wall Street apparatus have mutually conspired to do everything they can to keep interest rates low.
The fact that these measures have been taken to help the economy is wearing thin as an excuse for why bank rates on deposit accounts are so consistently meager. For the senior who relies on that income to pay expenses, the reasons for low interest rates do not matter so much as the reality that rates this low do not produce sufficient income.
In this situation, some seniors are considering peer-to-peer lending through Web sites such as Prosper.com and LendingClub.com. These sites facilitate transactions where people can lend money directly to other people, at fixed interest rates and with a degree of process involved.
Seniors who are considering peer-to-peer lending as a way to get more income coming through the door should be careful to understand the stark, potentially dangerous difference between a CD and a peer-to-peer loan.
A CD is protected by FDIC insurance. A loan is exactly that: a loan--meaning that there is a chance it will not be paid back.
Nevertheless, many seniors are smart to at least consider the potential upside of getting a higher interest rates on your money by extending small personal loans to verifiably creditworthy borrowers.
Mike666
26 February 2010 at 3:56 pm
Now all you have to do is admit it obvious the fed is Keeping the rates low so we are forced to spend the principal.
Once the banks and wall street get all our savings back in their pocket the rates of lending and savings will change drastic to benefit the banks and wall street .
once the average citizen puts his money in stocks the market will steal them again like they did when they used 911 as an excuse.
Its a shame these robberies are done in front of the world and no one is punished forthese crimes.
bamalucky
24 February 2010 at 1:48 pm
Did you do any research on default rates before writing this article?
You know the Prosper default rate is near 40% !