The APY rate that you get from Lending Club is variable. Lending Club is not a bank but an online P2P lending site that pairs up lenders like you and I with ordinary borrowers who need to borrow money for short term reasons but don’t want to deal with the hassle of banks and credit union lending policies.

But because it’s not a bank, Lending Club is not FDIC or NCUA insured up to $250,000 like the banks are. However, their investment loan rates (at least according to their prospectus) have been pretty solid for some time. If you are a Lending Club loan investment seeker, you can simply much search for loan offers that are more stable than the other ones in terms of credit history. People with stable and excellent credit histories tend to be substantially lower credit risks than those with bad FICO credit scores.

I’m just starting to get into Lending Club as an investor as Prosper is no longer accepting new applicants (when are they going to finally exit that quiet period anyhow). Like the author of this article says, it’s a plausible high yield savings account alternative. It beats the unimpressive CD rates we’ve been getting anyway.

Here’s a link of Lending Club’s rates and fees – https://www.lendingclub.com/info/rates-and-fees.action

Here’s a web link of Lending Club’s potential default rates and other investment statistics. As you can see, it’s not too shabby at all especially on the highest A grade loans – https://www.lendingclub.com/info/statistics.action

I only invest in loans that meet the following criteria:

– Borrower has no delinquencies, ever.
– Total loan payment (not just my share) is less than $150. Lower the better! A lower payment should be easier for the borrower to make.
– Not for a motorcycle or a wedding or a multi-level marketing program
– Borrower has less than $3000 in outstanding debt
– Borrower has good spelling and grammar, and answers questions sensibly.

As I said, this limits how many loans I can invest in. I’ve currently only managed to put in $1050, yielding 9.64%. But that’s enough for me, because I still consider it speculative.

Lendingclub.com and prosper.com are good p2p sources but not sure about using them as high interest savings account replacements. They are not FDIC insured! Yes default rate is low at less than 3% but there is still risk involved. Not really the best place to put your hard earned short term savings. Have you managed to figure out the zero risk loans?

(Vanguard web link)

This fund DOES NOT HAVE A STABLE VALUE so there is risk of loss. (It lost about 4% NAV in the past year’s credit disaster, making its net return 0%. Not bad, I say.)

I am also using Lending Club, however I can only put about $25 to $50 per month because of what loans I’m willing to fund.