Many people I know do nothing more with their money that leave it in their current accounts (checking, for the americans). These accounts may as well not give you any interest as its so appallingly low! The more savvy people move money into a savings account which in the UK average between 5 and 6.5%. So what should you do if you have filled you tax free ISA allowance for the current tax year yet you want a greater return than a high street savings account?

ZOPA. (Available in the UK and USA)

Simply put Zopa is members of the public lending to members of the public, easily, simply and securely via the Zopa website. This cuts out the greedy banks and brings in the new phenomena known as social lending.

To lend on Zopa is a simple as signing up, paying in your money and then deciding on what ‘markets’ you want to lend too. You decide how long you want to lend for (1 to 5 years) and also which market you want to lend to where the different markets reflect the perceived reliability of the people you lending to. For example, borrowers in the A market will have a better credit than those in the C market. However, you can typically lend at a higher rate of interest to those in the C market.

Typically my money in Zopa is lent out at a rate of 8% for 24 months, certainly much better than the high street rate of 6.5% that I have.  After 6 months and only £100 in Zopa I have made about £4 interest which includes interest from the people I have lent to and also interest on the money that is currently not lent out in my Zopa account. That is pretty good by anyones standards and now that I have used it for 6 months and got used to it and know there is little risk to my investment from defaulters I am going to invest more of my money in Zopa.

As a final note i’d also recommend Zopa for people that need a loan as you will typically get the loan a few percent less than you would in the high street.

Do any of you use Zopa?