PayPal v Prosper
FWIW, let me lead off by saying my cousin works at PayPal. As far as I know, I don’t know anyone at Prosper.
Those things said, PayPal was one of the few things I adopted early. They gave me $5 bucks! What’s not to like?
The thing is, I don’t really like PayPal anymore. I thought it was great for moving money around amongst friends, but the fees went really high once I tried doing eBay. I used to always wait the 3-4 days for free transfers in and out of my bank account but once I did eBay, my account was “upgraded” against my will and the transaction fees are killing me. I sold two pairs of hockey tickets and a pair of tickets to the King Tut show in Philly this year. All told, it was about $130 worth of transactions and I paid out $4.67 in fees. Because I usually use my PayPal account to send money to friends in CA for things like group birthday presents, I have only earned 76 cents in interest this year. But I note, PayPal is paying me 4.7% in their money market account, which is slightly better than ING Direct.
I’ve concluded that instead of holding $48.16 in the account, I’m going to move $40 of it over to Prosper so I can add it to my $19.xx balance and then make a $50 loan to someone. I will have a better return on my money and I won’t be tempted to spend it.
I realize that Prosper is essentially a $50 3-year CD, but so far, I’ve done ok in picking my loans. My first loan is a year old now. I have three others I made this year and all four loans are current, none of which were ever late or wonky in any way. My estimated ROI is well over 14%. Way better than the S&P this year. (YTD Up 3.2% on the adjusted close reported by Yahoo for Dec 4th when I drafted this)
Just thinking out loud right now. I have a lot of stuff on my mind.
DebtKid wrote:
Mapgirl,
Paypal’s fees are so frustering, I totally agree. How much do you have at prosper?
Posted on 05-Dec-07 at 3:53 pm | Permalink
mapgirl wrote:
DK- It’s $130 of my own cash, but $200 total b/c I reinvested my returns.
Posted on 05-Dec-07 at 4:14 pm | Permalink
Sean wrote:
“I realize that Prosper is essentially a $50 3-year CD…”
AHHHH! Prosper is nothing like a CD. CDs are low/no-risk. Like FDIC-insured, almost as good as a T-Bill no-risk. Prosper is not insured, and if you get a single default when you only have $200 in there your returns for the year and more are wiped out.
“…but so far, I’ve done ok in picking my loans.”
Me too. I have just over $600 in there now ($200 every couple months this year) and no lates on my loans, but there’s a pretty fair chance that at least one of my loans will go bad before it gets paid off.
I experienced the same thing back in the day with my paypal account’s mandatory “upgrade” and getting sick of the fees. For what it’s worth, I feel the same way as what you’re saying here: paypal - boo!, prosper - yay! but characterizing prosper as like a CD is totally wrong.
Posted on 05-Dec-07 at 5:44 pm | Permalink
mapgirl wrote:
Hi Sean: It’s not totally wrong. It’s that I view locking up my money for three years in a Prosper loan as being the same as locking it up in a CD, though you are correct, the CD is insured where a loan is not. But I think we’ve already covered that Prosper loans are risk bearing investments just by calling it a ‘loan’ in the first place. Yes?
Posted on 06-Dec-07 at 9:53 am | Permalink
peakeyed » PayPal v Prosper wrote:
[…] Check it out! While looking through the blogosphere we stumbled on an interesting post today.Here’s a quick excerptThe thing is, I don’t really like PayPal anymore. I thought it was great for moving money around amongst friends, but the fees went really high once I tried doing eBay. I used to always wait the 3-4 days for free transfers in and out of … […]
Posted on 14-Dec-07 at 1:51 am | Permalink
peakeyed » Comment on PayPal v Prosper by mapgirl wrote:
[…] Check it out! While looking through the blogosphere we stumbled on an interesting post today.Here’s a quick excerptDK- It’s $130 of my own cash, but $200 total b/cI reinvested my returns. […]
Posted on 14-Dec-07 at 7:26 am | Permalink