Seven in 10 Moneywise users would use P2P lending to boost savings
Seven in 10 (71%) Moneywise.co.uk users would consider using peer-to-peer (P2P) lending in a bid to earn higher returns on savings, our latest poll results reveal.
This is split between nearly four in ten people (39%) who already use it, and over three in ten people (32%) who would consider using it in future.
Interestingly, our poll, which received 890 votes between 9 and 16 August, also reveals that more people have gotten into P2P lending over the last six months.
When we asked the same question in late February 2016, of the 892 who voted then, a smaller 33% said they already use P2P lending, while 38% said they’d consider doing so in future.
An increasing number of people have also now heard of P2P – with 9% not having heard of it in February, compared to just 6% now.
However, conversely the number of people who wouldn’t use P2P has risen from 21% in February to 23% in August – perhaps highlighting a greater awareness of the risks involved.
P2P lending websites match savers with borrowers. The savers then effectively loan their money to borrowers, earning interest on top.
The main attraction is that P2P lending typically offers much higher interest rates than traditional savings accounts.
However, unlike cash savings, which are generally protected up to £75,000 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).
Look out for our peer-to-peer feature next week, which looks at the risks and rewards, as well as analyses the key players in the industry.
The pie charts below highlight the key differences between savers’ views on P2P lending in February compared to now.
Moneywise February peer-to-peer lending poll
Moneywise August peer-to-peer lending poll
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
The Financial Services Compensation Scheme is the compensation fund of last resort for customers of authorised financial services firms. If a firm becomes insolvent or ceases trading, the FSCS may be able to pay compensation to its customers. Limits apply to how much compensation the FSCS is able to pay, and those limits vary between different types of financial products. However, to qualify for compensation, the firm you were dealing with must be authorised by the Financial Services Authority (FSA).