Comments on: Lending Club: The Cost of Inactive Money

By: John

John — Fri, 15 Jan 2010 00:36:46 +0000

Lending Club fees can be pretty high.

I have $125 invested including the $25 bonus and I noticed that they take their 1% cut from the payments including principal and interest. Either that or they always round up to $.01 and they make a killing on $25 loans.

My account value has increased by $1.37, but the interest paid and interest accrued amount to $1.41. They have collected $.04 in fees or 2.8% of my interest payments so far. Let’s just say I think they have a solid business model. I am still making better yields than I would with a traditional CD or savings, but LC itself is making good money.

By: almost there

almost there — Sat, 26 Dec 2009 16:55:16 +0000

I have given up waiting for LC to invest the money per my instructions. I just keep track of the money available and purchase $100 notes when I reach that level. I will give it a year to see what my actual return is.

By: John DeFlumeri Jr

John DeFlumeri Jr — Sat, 26 Dec 2009 15:31:38 +0000

Idle money in a regular savings account pays less than 1% interest, but there is zero risk. It’s a trade off.

John DeFlumeri Jr

By: Patrick

Patrick — Thu, 24 Dec 2009 01:48:39 +0000

Thanks for the heads up. I recently invested more money in Lending Club and I soon realized that not all funds get invested to I have to keep checking back and reinvesting funds. I didn’t realize that they calculate your ROI with money in cash. That doesn’t seem right.

By: Larry F.

Larry F. — Wed, 23 Dec 2009 19:47:59 +0000

I certainly ran into this problem (idle funds not collecting interest) when purchasing their free self-directed IRA. It takes awhile to purchase $15,000 worth of Notes!

Another area of idle funds is when selecting Notes to purchase BEFORE their approved. During the 2 week approval period, the borrower can cancel the loan or Lending Club can terminate the loan request as a result of not meeting their criteria. While your funds are given back to you if a loan is canceled, they’re tied up earning no interest for the entire time.

As mentioned in the article, it’s a good idea to set your Reinvest criteria in order to receive an Email, even though you may not use the selection made.