http://blog.lendingclub.com/2007/12/21/the-money-marathon-make-it-automatic/ The Official Lending Club blog Sun, 29 Jan 2012 13:31:47 +0000 hourly 1 http://blog.lendingclub.com/2007/12/21/the-money-marathon-make-it-automatic/#comment-483 Al Erickson Sat, 22 Dec 2007 08:16:57 +0000 http://blog.lendingclub.com/2007/12/21/the-money-marathon-%e2%80%93-make-it-automatic/#comment-483 It's all well and good for Lending Club to promote automatically reinvesting account earnings. One should never leave funds in a position where it is not earning a return. So it is rather dismaying to note that Lending Club puts it's lenders in that very position. Cash received from loan payments are placed in a position that provides no return. Certainly one can promptly withdraw loan payments immediately upon receipt but even then the transfer time required to receive the money and then reinvest it in another position can take at least four days. All in all it's not very convenient or rewarding for a lender. I would rather accumulate the funds in my cash account and reinvest the monies in new loans. But I'm not excited about leaving the funds in a non-earning position until it's practical to initiate a new portfolio. I believe Lending Club needs to take it's own advice on behalf of it's lenders: "Automatically reinvest – Set up your accounts so that any interest or income you receive from investments and savings are automatically reinvested for you. This way you will start compounding your investments and they will grow at a faster rate." I suggest that Lending Club pay a reasonable money market rate on cash account funds that are awaiting loan placement or withdrawal. That's what PayPal does and PayPal pays a competitive rate to boot. Even a below market rate would be welcomed if not totally satisfactory. It's all well and good for Lending Club to promote automatically
reinvesting account earnings. One should never leave funds in a
position where it is not earning a return. So it is rather
dismaying to note that Lending Club puts it's lenders in that very
position. Cash received from loan payments are placed in a position
that provides no return. Certainly one can promptly withdraw loan
payments immediately upon receipt but even then the transfer time
required to receive the money and then reinvest it in another
position can take at least four days. All in all it's not very
convenient or rewarding for a lender. I would rather accumulate the
funds in my cash account and reinvest the monies in new loans. But
I'm not excited about leaving the funds in a non-earning position
until it's practical to initiate a new portfolio. I believe Lending
Club needs to take it's own advice on behalf of it's lenders:
"Automatically reinvest – Set up your accounts so that any interest
or income you receive from investments and savings are
automatically reinvested for you. This way you will start
compounding your investments and they will grow at a faster rate."
I suggest that Lending Club pay a reasonable money market rate on
cash account funds that are awaiting loan placement or withdrawal.
That's what PayPal does and PayPal pays a competitive rate to boot.
Even a below market rate would be welcomed if not totally
satisfactory.

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