Zopa, the Person-to-Person Lender, Partners with Credit Unions to Offer High Yield CDs
Update: Zopa Ends Operations in the US. According to Zopa's blog,
Zopa’s US customers’ deposit accounts continue to be insured by the NCUA up to $250,000, and servicing of those accounts as well as the loans will be assumed by the credit unions within 90 days.
Update 2/13/08: The yield on Zopa's 12-month CD has gone down to 4.25% APY.
Update 1/29/08: The yield on Zopa's 12-month CD has gone down to 4.50% APY.
Zopa has parterned with six US credit unions to offer online CDs and loans. Zopa was first launched in the UK in 2005. It's similar to Prosper.com in that it provides a form of peer-to-peer lending. What's unique about Zopa in the US is that they've partnered with credit unions so that the CDs that you purchase through Zopa are guaranteed by the issuing credit union and federally insured by the NCUA.
The current CD being offered by Zopa has a yield of 5.10% APY and a term of 1 year which is competitive as you can see from my weekly rate summary. The details about the Zopa CD are described in their Zopa CD FAQs. It seems to be equivalent to any bank certificate of deposit. The compounding is annual so the rate is also 5.10%. The rate is fixed during the term. The penalty for early withdrawal is 90 days of interest.
Requirements for Buying a Zopa CD
The one thing that makes this different than a bank CD is that Zopa requires you to pick at least one borrower to help. As stated in this Zopa FAQ, "If they want to earn the maximum possible on their Zopa CD, they will help their picked borrowers a little. But the bigger their Zopa CD, and the lower the rate they choose to receive, the more help they give." So I guess the 5.10% APY is currently the maximum rate you can choose. It seems that you're allowed to accept lower rates if you choose to provide more help.
To buy a Zopa CD or to take out a Zopa loan, you'll need to be a member of one of Zopa's partner credit unions. The six credit unions that have partnered with Zopa include Addison Avenue FCU, Affinity Plus FCU, First Tech CU, Forum CU, Provident CU, USA FCU. Most of these credit unions mention this new Zopa partnership on their websites. Most have easy membership qualifications so anyone in the US can qualify. Below is a summary of how you can qualify for membership in these credit unions.
Provident Credit Union Membership Qualifications:
Field of membership includes members of several associations. Some of the associations listed with national coverage include the American Cancer Society and the Sierra Club and Sierra Club Foundation. The Sierra Club has a membership page where you can become a member online. The lowest membership level costs $25.
For those in California, you can be immediately eligible to join if you live or work in one of the following counties: San Mateo, San Francisco, Santa Clara, Alameda, Contra Costa, Monterey, Sacramento, El Dorado, Placer and Humboldt. Also those in Los Angeles City are elibible. Please see the eligibility page for the full details.
Membership into the credit union requires a $10 membership fee, but this is waived if you apply online. A minimum deposit of $25 is required into the share savings account.
Addison Avenue Federal Credit Union Membership Qualifications:
Field of membership includes members of the Financial Fitness Association. There's a $5 fee to join this association.
Employees of certain companies can be immediately eligible to join the credit union. Please see the eligibility page for the full details.
Membership into the credit union requires a minimum deposit of $5 in the Daily Savings Account.
USA Federal Credit Union Membership Qualifications:
Field of membership includes members of the Prime Meridian Association. Anyone can join this association with a $10 membership fee.
You can be immediately eligible to join the credit union if you are an active or retired military member or if you are employed by one of its Select Employer Groups. Please refer to their membership eligibility page for more details.
Membership into the credit union requires a $5 membership fee and a minimum opening savings deposit of $5.
Affinity Plus Federal Credit Union Membership Qualifications:
Field of membership includes members of the Affinity Plus Foundation. The cost of membership is $25.
You can be immediately eligible to join the credit union if you live in certain parts of Minnesota or if you are a student in the Minnesota State University System. Please refer to their membership page for the full details.
Membership into the credit union requires a $10 minimum deposit into the share savings account.
Forum Credit Union Membership Qualifications:
Membership into Forum CU is open to residents of several Indiana counties (including most of the Indianapolis metro area). You can also qualify based on select employer groups and family. I wasn't able to find their membership page, but I did find this Q&A page with some more details.
Credit union membership requires a minimum deposit of $5 into a savings account.
First Tech Credit Union Membership Qualifications:
Field of membership is open to those who live in any school district of Washington or in Lane County, Oregon. Please refer to their membership page for the full details.
Credit union membership requires a minimum deposit of $5 into the Regular Share Savings Account.
Banks Mentioned in this Post:
|Addison Avenue Federal Credit Union|
Locations: 37 Health Rating:
|Recent Posts: 4.25% 12-Month CD (and up to 4.45%) at... | 3.01% Reward Checking Account at Addis...|
|FORUM Credit Union|
Locations: 12 Health Rating:
|Recent Posts: 3.75% Reward Checking Account at FORUM... | 5.50% 17-Month / 5.50% 21-Month CD at ...|
|Latest Review: "I have been with Forum for awhile, and it is past time to switch to another fi..."|
|Provident Credit Union (CA)|
Locations: 19 Health Rating:
|Recent Posts: Updated Review of Provident CU's Super... | 3.75% 15-Month CD at Provident Credit ...|
|Latest Review: "I received this email over the weekend from Provident CU: "Our records ind..."|
|USA Federal Credit Union|
|Recent Posts: 4.50% 18-Month CD at USA Federal Credi... | 7.00% 7-Month CD at a California CU - ...|