Be Your Own Little Credit Card Company? April 25, 2007March 6, 2017 BUT IT’S BIGGER THAN A WATERMELON . . . . . . and it didn’t seem to tug the plane very fast. (And the guy driving it was, arguably, a bit annoying.) (Though who am I to talk?) Click here. THE ULTIMATE DISINTERMEDIATION This one is fascinating. You know those obscene interest rates credit card companies charge? No one who comes to this page ever pays them, but tens of millions of people do. Well, what if you could be the credit card company, so to speak? Maybe not charging the full 21% or 29% or whatever, but earning a lot more on your money than the 4.5% your money market fund is paying you. Or – if I’ve misjudged you, and you do borrow at credit card rates – what if you could borrow for at least somewhat less? From me! That is the premise of Prosper.com, a very well thought out enterprise about which you will surely have frequently asked questions. (I.e., how does Prosper.com make its money? By clipping the borrower 1% or 2% for originating the loan and then 0.5% to 1% a year for servicing it.) To all the obvious objections that spring to mind – at least the ones that sprang to my mind – there are ingenious answers. The limit on borrowing is $25,000. Lenders – who are encouraged to diversify over many loans in chunks as small as $50 each, and who can place ‘standing bids’ so they don’t literally have to hand-transact dozens of separate $50 or $200 loans – can ultimately invest as much this way as they want, all without ever even knowing the name of the various borrowers. Move over, Visa; here comes Aunt Vanessa, who’ll take 12% instead.