Author Topic: LC should offer interest on the cash account  (Read 3791 times)

rj2

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LC should offer interest on the cash account
« on: August 20, 2016, 03:31:58 PM »

I know, it's supposed to be peer-to-peer lending, not a bank. But why not? Why not turn the cash account into a high-interest savings account. Pay us something like 0.75% to 1% on our cash balances. I'm sure that LC can find something to do with the money, and when we use it to buy a note they see the cash transfer coming a few days in advance--so they could easily manage their investments.

Why would I want this? Here's why:

I"m continually debating whether to transfer another $10k to lending club in my IRA. I have had good returns on the $7k I have invested at LC now, and I'd like to add to my investment. BUT, I just can't see how I can get $10k invested in $25 notes in any reasonable amount of time given the paltry number of notes being listed.

So I don't transfer my money, even though LC is offering me a $100 bonus if I do. I just can't see how I would get my money invested in any reasonable amount of time.

So how does paying interest on cash balances help? Well, at least I'd be getting SOMETHING for my money while I wait to invest it.

If they don't want to pay cash balances on the cash account, they could offer a savings account on the side, and move cash in and out of it between the "checking" type main account balance. I don't know.

yojoakak

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Re: LC should offer interest on the cash account
« Reply #1 on: August 20, 2016, 03:50:08 PM »
I miss the early 2000's.

"Rate Chasers Are Online and Moving Cash Quickly"

http://www.nytimes.com/2007/10/13/business/yourmoney/13money.html?_r=0
« Last Edit: August 20, 2016, 03:51:45 PM by yojoakak »

jennrod12

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Re: LC should offer interest on the cash account
« Reply #2 on: August 20, 2016, 04:50:03 PM »
$100 is one percent of $10000, and you don't even have to leave it in cash!

Jenn

rawraw

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Re: LC should offer interest on the cash account
« Reply #3 on: August 20, 2016, 04:54:17 PM »
Yea, they should give us high interest rates because they make so much money already and should just increase our returns!  Where do I sign the petition!  #NoInterestAccountsMattersToo

Rob L

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Re: LC should offer interest on the cash account
« Reply #4 on: August 20, 2016, 05:30:21 PM »
I miss the early 2000's.

"Rate Chasers Are Online and Moving Cash Quickly"

http://www.nytimes.com/2007/10/13/business/yourmoney/13money.html?_r=0

Thanks or that terrific post; especially enjoyed the personal story of Elizabeth Warren dodging the dot com crash.

The central banks broke the financial system to prevent an apocalypse.
It's good that they did. The alternative would have been the end of the world as we know it.
Now we live in that broken world while the central banks try to put Humpty Dumpty back together again.
I wonder if I'll ever see that in my lifetime. You know; long term rates set by markets, etc.
Meanwhile the Fed struggles with a tiny 0.25% bump one way or the other and the markets go crazy.
We just have to play the cards we're dealt.


rj2

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Re: LC should offer interest on the cash account
« Reply #5 on: August 20, 2016, 06:20:38 PM »
$100 is one percent of $10000, and you don't even have to leave it in cash!

Jenn

It is FOR NOW. What happens when I start getting payments I can't manage to reinvest?

rawraw

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Re: LC should offer interest on the cash account
« Reply #6 on: August 20, 2016, 09:17:37 PM »
I miss the early 2000's.

"Rate Chasers Are Online and Moving Cash Quickly"

http://www.nytimes.com/2007/10/13/business/yourmoney/13money.html?_r=0

Thanks or that terrific post; especially enjoyed the personal story of Elizabeth Warren dodging the dot com crash.

The central banks broke the financial system to prevent an apocalypse.
It's good that they did. The alternative would have been the end of the world as we know it.
Now we live in that broken world while the central banks try to put Humpty Dumpty back together again.
I wonder if I'll ever see that in my lifetime. You know; long term rates set by markets, etc.
Meanwhile the Fed struggles with a tiny 0.25% bump one way or the other and the markets go crazy.
We just have to play the cards we're dealt.
The market does set long term rates.  The belief the Fed does is a popular myth these days

fliphusker

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Re: LC should offer interest on the cash account
« Reply #7 on: August 20, 2016, 10:14:34 PM »
rj2, have you looked into FOLIO?  Ya I know, I am beating the FOLIO drum again.  :P  Or is IRA not allowed to invest in FOLIO?  (Think I read that somewhere.)

rj2

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Re: LC should offer interest on the cash account
« Reply #8 on: August 20, 2016, 11:46:06 PM »
I have a folio account. I can only find a handful of notes that meet my standards there as well. Some. But not a lot.

A year ago or was slow getting my money invested when I transferred in about $7000, but now it's a lot worse.

Rob L

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Re: LC should offer interest on the cash account
« Reply #9 on: August 21, 2016, 11:18:00 AM »
I miss the early 2000's.

"Rate Chasers Are Online and Moving Cash Quickly"

http://www.nytimes.com/2007/10/13/business/yourmoney/13money.html?_r=0

Thanks or that terrific post; especially enjoyed the personal story of Elizabeth Warren dodging the dot com crash.

The central banks broke the financial system to prevent an apocalypse.
It's good that they did. The alternative would have been the end of the world as we know it.
Now we live in that broken world while the central banks try to put Humpty Dumpty back together again.
I wonder if I'll ever see that in my lifetime. You know; long term rates set by markets, etc.
Meanwhile the Fed struggles with a tiny 0.25% bump one way or the other and the markets go crazy.
We just have to play the cards we're dealt.
The market does set long term rates.  The belief the Fed does is a popular myth these days

The ECB is still in the midst of QE at the present time. The BOJ is in perpetual QE and is running out of government bonds to buy. Should our own economy falter and deflation once again become a problem is there any question that our Fed would go back to the QE well again?  Sure, I guess the global market sets long term rates but it has a lot very extraordinary factors to consider just now.

Rob L

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Re: LC should offer interest on the cash account
« Reply #10 on: August 21, 2016, 11:20:06 AM »
rj2, have you looked into FOLIO?  Ya I know, I am beating the FOLIO drum again.  :P  Or is IRA not allowed to invest in FOLIO?  (Think I read that somewhere.)

There was much discussion a couple of years ago as LC first allowed, then disallowed and then again allowed Folio trading by IRA accounts.
At the present time it is allowed.

fliphusker

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Re: LC should offer interest on the cash account
« Reply #11 on: August 21, 2016, 11:57:29 AM »
I have a folio account. I can only find a handful of notes that meet my standards there as well. Some. But not a lot.

A year ago or was slow getting my money invested when I transferred in about $7000, but now it's a lot worse.
If you are using your regular filter on FOLIO you really need to rethink it. The factors that you use to determine solid notes does not carry over really for FOLIO.
Wish I could find the thread that Anil pounded this point into my thick head.
Here is an example. On new notes, I do not touch them if they have inquiries. If I am buying a note on FOLIO that is let's say 20 months old on a 60-month term, why would I care if he the note has inquiries that are almost two years old? Or that it is a B note. I only care about its YTM.
I am very picky on FOLIO, but there is a lot I can be very picky with. With notes on FOLIO that crush the YTM and "safer", doubt I go back to the regular platform anytime soon. It is just a scary platform to get started with as there are not guides or others to really help you along the way. 
Rob thanks for clarifying that. Was not sure what the policy was/is.

Emmanuel

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Re: LC should offer interest on the cash account
« Reply #12 on: August 22, 2016, 05:25:45 PM »

I know, it's supposed to be peer-to-peer lending, not a bank. But why not? Why not turn the cash account into a high-interest savings account. Pay us something like 0.75% to 1% on our cash balances. I'm sure that LC can find something to do with the money, and when we use it to buy a note they see the cash transfer coming a few days in advance--so they could easily manage their investments.

Why would I want this? Here's why:

I"m continually debating whether to transfer another $10k to lending club in my IRA. I have had good returns on the $7k I have invested at LC now, and I'd like to add to my investment. BUT, I just can't see how I can get $10k invested in $25 notes in any reasonable amount of time given the paltry number of notes being listed.

So I don't transfer my money, even though LC is offering me a $100 bonus if I do. I just can't see how I would get my money invested in any reasonable amount of time.

So how does paying interest on cash balances help? Well, at least I'd be getting SOMETHING for my money while I wait to invest it.

If they don't want to pay cash balances on the cash account, they could offer a savings account on the side, and move cash in and out of it between the "checking" type main account balance. I don't know.

First, investing should not take long. We see clients deploying more than $100K in less than a week (and still being picky). Let's say there are 200 loans issued per day, you could invest $14,000 by putting only $50 in the top 20% of them.

Second, if you really want to take it slow, why not leaving most of your cash in a bank account, with a recurring transfer to LC?

Rob L

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Re: LC should offer interest on the cash account
« Reply #13 on: August 22, 2016, 06:07:04 PM »
First, investing should not take long. We see clients deploying more than $100K in less than a week (and still being picky). Let's say there are 200 loans issued per day, you could invest $14,000 by putting only $50 in the top 20% of them.

I haven't been closely keeping up with current LC retail loan availability, but that's $100k, in one week, in LC $50 LC notes (2,000 notes)? I'll leave the "picky" quantification in the eye of the beholder. And for those who didn't do the arithmetic the $14k in the top 20% (again eye of beholder) is per week (I was thinking per day when I first read it). The $14k per week rather than $100k in a week would be "super picky" then, right?

But, directly to the "interest on cash account" OP, I am not in favor. Cash in my Fidelity and E*TRADE accounts earns me like 0.01%, so why should LC be different? My interests (no pun) are far better served given an LC that survives and prospers (no pun again). If they make a bit off the float then good for them. Guess I'm more worried about LC than me, because if LC fails I have bigger problems.

Debt Free

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Re: LC should offer interest on the cash account
« Reply #14 on: August 27, 2016, 03:22:07 AM »
But, directly to the "interest on cash account" OP, I am not in favor. Cash in my Fidelity and E*TRADE accounts earns me like 0.01%, so why should LC be different? My interests (no pun) are far better served given an LC that survives and prospers (no pun again). If they make a bit off the float then good for them. Guess I'm more worried about LC than me, because if LC fails I have bigger problems.

I agree 100%.  10-20 years down the road, who knows?  Maybe they will.  But best to keep it simple and put that 0.01% to work stabilizing and improving the product.