What is your view on Zopa?

pqrdef

KnightSmile wrote: »

Thannks for all your replies - i was looking at the first Direct 8% account but only take home £1350 after tax and its £1500 minimum per month so a non starter.

So long as you meet their criteria for opening a current account, you don't have to pay in £1500 a month. There are other ways to avoid the monthly fee, e.g. put £1 in an online savings account.

To get the £100 joining bonus, you have to pay in £1500 within a month once, but not in a single payment. Improvise.

nearlyretired2004

as long as things haven't changed since I openend mine (and I dont think they have - although I haven't checked) ......

This is to add to what PQRDEF says above.

Although its not widely advertised you can avoid the monthly fees on the current account and still qualify for the monthly saver EITHER by paying in £1500 per month OR ... and this is the important bit .... 'By holding another qualifying product' e.g their websaver account. I opened my regular saver account over the phone and the websaver at the same time ..... have never paid anything into the current account (except the £300 per month which then gets transferred into the regular saver) - thus avoiding jumping through the hoops that jamesd suggests - although thats also a perfectly valid way of meeting the t's and c's

EDIT: just re-read jamesd's post and he mentions the saver account as well, but not sure he makes it clear that this meets the criteria for opening the regular saver without the current a/c monthly funding

KnightSmile

OK that sounds like a good idea. I currently have a Santander Preferred Current Account which I have to pay £1000 per month into and I get 5% interest on up to £2500, I always now have £2500 in here.

I recently (on Friday) applied for a Halifax current account where I have to use their swicthing service and pay in £1000 per month to get a free fiver each month. so I then transfer thr money to my Santander account to make sure thats fine.

Now will it be OK once the I have successfully switched to Halifax, within a couple of days I switch AGAIN to first direct current account and just recycle the money as mentioned? I want the First direct account for the £100 switching and to open First Direct Regular Saver Account for 8% interest. Am I right in understanding that if I open the savings account then I dont need recycle £1500 into my account each month?

Is my plan workable, also would it do anything to my credit rating or anything because I also have a smile current account (used to be my main current account) and would mean I have four current accounts!!

I also want to open santander Loyalty Fixed Rate Monthly Saver (Issue 1) which is a saving accounts which holds my money for 13 months and will get me 5%.

So effectively in a nutshell my plan is

First Direct Current - salary of £1300 gets paid in
I then transfer £1000 into my Halifax current account
I then transfer £1000 into my Santander current account
I then transfer £250 into my Santander Saving account
I then transfer the remaining £750 back into the First Direct current account
I then transfer $300 into the First direct savings account (8%)
I then spend the rest

nearlyretired2004

I'm confused - which account are you switching TO Halifax? All accounts mentioned still seem to be in the final 'plan'

Also, your 'plan' still seems to include the Halifax account which you have said you were going to switch to the First Direct?

And I dont think you will get the switching reward from Halifax immediately - might have to wait three months at least before you can switch away again

A better plan might be to move one or two direct debits to the Smile current account (you would have to find out how many you need for it to qualify for the switching service .... ) and the switch THAT to First Direct ....

and yes, the First Direct savings a/c means you do not have to fund with the £1500 per month - that was the point of my post above.

Although opening new accounts will generate credit searches, I dont believe it shouldaffect your credit rating - unless you have overdraft facilities on the accounts

I have 9 (was 10 until I recently closed my Santander Business a/c which was earning 6% on £2500 for a year ....)

3 X Halifax Reward (from the days when you could have 3)
3 X Lloyds Vantage (now redundant and empty since the rates reduced)
2 X Santander (one historic and empty, 1 'Zero' earing 5% on £2500)
1 X First Direct

KnightSmile

thanks for the response nearlyretired24.

I am switching from my Santander current account (5% on up to £2500) to the Halifax current account. This has not been processed yet. I want to still keep my santander though with £2500 in it. I hope this makes sense!

When I'm switching the accounts I want to keep the others open

jamesd

Yes, that's a good plan. Note that the last I checked the Faster payments limit for Santander was £300 a day so you'd have to do the Santander to First Direct step over three days.

KnightSmile

Cool thanks - another quick question, one saving account I'm looking at asked whether I want the interest monthly or annually? Now I'd guess monthly is better as it should have a compound effect, however I have a sneaky feeling the annual would be the better option for a reason unknown to me! lol.

Can anyone explain which option is best?

atush

I like the Idea of Zopa and have looked into it but: I object to GG's statement:

It's good of you to share your rather odd view of Zopa. Have they upset you or are you deterring new lenders to safeguard your own returns?

Most borrowers intends to repay their loans. Defaults are extremely low. Zopa is NOT high risk. If you think it is, you don't understand risk.

I like Zopa and am interested in Zopa and have been thinking of investing with them for a couple of years but havent yet. but I do object to the above as clearly your capital is AT RISK if the borrower doesn't repay and they do as has been illustrated above. But, you can leverage theis risk downwards by lendoing only a fraction to each person and to lend to mulitle persons so as to spread the risk of any one person defaluting (or 2 or 3 etc) .

To say ther is NO RISK of CAPTIAL LOSS is quite stupid and wrong. but it would be stupid and wrong to lend to only one individual as well. But please do try to stick to actual factual evidence in such broad statements.

experience08

atush wrote: »

To say ther is NO RISK of CAPTIAL LOSS is quite stupid and wrong. but it would be stupid and wrong to lend to only one individual as well. But please do try to stick to actual factual evidence in such broad statements.

Zopa is a waste of time mate, just stick the money in an ISA, then NS&I, then lend it to your mate...£100 repayable at £120 at the end of the month...but be careful as the idiots from trading standards may brand you a loan shark.

jamesd

KnightSmile wrote: »

one saving account I'm looking at asked whether I want the interest monthly or annually? Now I'd guess monthly is better as it should have a compound effect, however I have a sneaky feeling the annual would be the better option for a reason unknown to me!

You're sneakily right sometimes.

Compounding in a tax free account makes no difference. The monthly inerest payments are compounded and the annual ones are also compounded behind the scenes, so there's no difference in compounding between the two. Before tax.

Tax is due on the interest when it is paid to you. In your case this won't make any difference but some people can avoid higher rate tax by choosing to get annual interest that is paid in a different tax year. Others need to avoid annual because the monthly payment could keep them from going into higher rate in that new year.

Tax also makes a small difference to compounding. In the annual case the interest isn't paid to you until the end so tax has no effect until then. In the monthly case tax is deducted when the interest is paid, so you have compounding of 20% less interest, because of the 20% tax. The effect is small but real. There's no effect in tax free accounts like ISAs.

Now personally, I prefer monthly interest because I like to see the monthly interest payments coming in. that provides a clear short term reward for doing the saving that I wouldn't see as often with annual payment. It's not quite optimal for tax but seeing the monthly payments is a good thing psychologically. More immediate reward, less deferred reward.