flanerie.org

I am a member of Zopa, an online lending exchange. It works by matching up people who have spare money with people who need to borrow.

Which is what banks do, of course, except that they skim off a massive slice in the middle.

Zopa skims off 0.5% from the borrower and 0.5% from the lender. Apart from that, everything is between the lender and the borrower - so the lenders gets a better return and the borrowers pays less interest.

And because the borrowers are all people, lenders know that their money isn't being lent to corrupt regimes.

Zopa do credit scoring and background checks, and also break lenders' money down into bite-size pieces. So if you lend £500, it would typically be lent out to 50 different borrowers at £10 each (although you could choose to lend in 5 chunks of £100, which isn't particularly advisable).

The smaller the chunks of money, the smoother the bad debt experience. Zopa estimate the bad debt at the start so a lender sees an expected return after bad debt and fees. Zopa have been so efficient at credit scoring so far that there have only been two problem debts in a couple of years of operation, and so the returns have been better than they estimated.

The rates for borrowers are usually mcuh better than the banks will give them, and again the borrower has the comfort of knowing the interest is going to another person, not an overpaid bank executive.

Zopa isn't perfect for everyone, but it is well worth considering and at the moment they are offering a £50 cash bonus for new members who join using my referral link, and go on to lend or borrow (it is £30 after the end of February). Membership is free, so sign up to take a look around.

I receive an equal cash bonus, so we both win.

It is UK only at the moment, but there are plans to expand into the USA and then take over the world.

Follow this link to join Zopa

Any questions, let me know.