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Do you Prosper?

I loaned out $200 as a test of the Prosper system before deciding whether to commit more money. To date, however, I am quite disappointed with the system. From my experience, I found a long overhead waiting time before your money can be loaned out and before payment can be collected and deposited back into your bank.

The following is my experience:

1) Funding of the account. The money disappeared from my linked bank account on the morning of 2/15 but appeared in the Prosper system for use more than two full days later on the evening of 2/17. I lost 2 days of float of my money.

2) I funded two loans which were closed on 2/18 but for whatever reason, the origination date was delayed to 2/22. I lost another 4 days of float of my money here.

3) The borrower made a payment on 3/22 but the money was only available on 3/28. Six days are lost here.

4) You need to have $25 before you can transfer out any payment. If your loan payments are too small, sorry, they cannot be transferred out.

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Bummer. I can’t transfer out the loan payment because the amount is too small.

5) When you have finally accumulated $25 of payment, it again will take a few days for the money to make it to your bank after you submit a request at Prosper. I estimate I will lose another 3 days of float.

I am sure glad that I tried out the system with only $200. On hindsight, I should never have signed up with Prosper at all. Until Prosper can positively address the above concerns, I will pull out the money at the first opportunity. (But alas, the loans are all for three years unless the borrower decides to pay up early).

Conclusion? With the long delays associated with funding and loan payment, Prosper seems to be skewed against the lender.

EDIT 04/05/06: See also Vanguard Diehards’ discussion HERE.

Cognitive Reflection Test

I found the following three questions from an article in the April 2006 issue of Smartmoney rather interesting:

1) A bat and a ball cost $1.10 in total. The bat costs $1 more than the ball. How much does the ball cost?

2) If it takes five machines five minutes to make five widgets, how long would it take 100 machines to make 100 widgets?

3) In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half the lake?

Each question has an intuitive — but wrong — answer. See if you are ‘tricked’ by your intuition. 😉

PS. The answers are given in the Comments.

Fidelity 529 college rewards credit card

2006-03-27-fidelity529card.gifI received the Fidelity 529 college rewards credit card earlier this month. I think for parents setting up a 529 College Plan, this credit card offers a fantastic deal and it is one of the rare credit cards that gives you 2% back on practically anything you charge to the card. In addition, it also offers you online Bill Payment service which lets you pay many merchants including even your mortgage or electric bill, companies that traditionally do not accept credit cards. Although for these payments no reward points are earned, you can still benefit by enjoying the additional float on the money that you otherwise would have to pay earlier.

I just hope that MBNA would not pull the plug on this card after the recent merger with Bank of America.