Key Takeaways

A tanda is a rotating savings and credit association for a group of friends or relatives. Members contribute money to a pool, which is then given to one member. Tandas offer interest-free loans and help people save money. They are common in developing countries and have various names worldwide.

Definition and Example of a Tanda

A tanda, originating from Mexico, involves a group of people pooling money. Members, often friends or family, take turns receiving payouts. ROSCAs are prevalent in developing countries and immigrant communities. Tandas are known by different names globally, such as cundina, hui, paluwagan, asusu, esusu, susu, and chit fund.

How Do Tandas Work?

Tanda members agree on contribution amounts and frequency. The order of payouts is predetermined or chosen randomly. Tandas provide short-term loans, saving opportunities, and social pressure to save money.

Alternatives to Tandas

If tandas are not suitable, individuals can use standard banking features like automatic transfers to savings accounts. Online money pooling services offer similar benefits with added security measures.

Advantages and Disadvantages of Tandas

Pros include social benefits, rare missed payments, and online options with safeguards. Cons include payment risks, potentially damaging trust among participants, and fees for online versions.