As a follow-up to my last post regarding Prosper, we have decided to quit lending on Prosper and begin moving our money out of this investment. While our loans are current and we're earning an average interest rate of 12.21%, we don't like the fact that each time we receive a payment, the money sits in our Prosper account accruing no interest, thus, reducing our return. For the amount of risk involved in personal loans, it’s just not worth it to us.
The money deposited in our Prosper account with each payment can't be loaned again or even withdrawn until it reaches a $25 minimum balance. Since we have 2 loans and the payments are only ~$1.65/month each, it took many months for our Prosper account balance to reach the $25 mark. Now that our account has reached the minimum transaction amount, we are moving $25 out of Prosper and into our Emigrant Direct savings account. At this rate though, it will take a couple of years until we have all of our money out.
We had such high hopes when we first learned about Prosper, but I'm glad that we did not invest more money because I have read numerous reports of defaults, even with A grade borrowers such as we lent to. Once in collections, these lenders are lucky if they get pennies on their dollar.