Thursday, October 8, 2015

Everyday microloans with microinterest

ING Direct, now Capital One 360, has a nice feature where if your checking account goes below zero you get a loan for the negative amount from the bank at a competitive rate. In most cases this happens only rarely and only for small sums, so that the actual amount that customers pay for the loan is on the order of pocket change. Still, this benefits the bank since they profit from the scale of the loans.

Perhaps it would be useful for people to do the same with each other. Of course you'll loan a friend money with no strings attached, but attaching a small amount of interest might make everyday microloans more likely among people who don't necessarily have strong social ties. I am not sure about to mitigate the risk of defaults, though. Perhaps if the transactions were publicly inspectible (similar to Bitcoin)?

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